Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to Limoneira’s Second Quarter Fiscal Year 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

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

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

Chief Palamountain, call Officer; the today Harold President On are and Financial Chief and Mark Officer. Edwards, Executive

to By second year went today quarter which PM X.XX the at now, release, have approximately earnings Eastern fiscal should out everyone access XXXX Time.

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

Before uncertainties, or outside number we differ management prepared may like known implied achievements expressed of or Such response remind control and remarks of forward-looking the additional everyone results, questions. statements its in performance and and to unknown by cause begin, that forward-looking many are we results, company’s would achievements make future to statements the a contain which could involve and statements. forward-looking performance your such to or significantly from risks statements

contribute as that we no with such new those other or cause obligation as result in future and whether update the a or release. XX-Ks in to XX-Qs of law, information, factors Important detailed SEC differences include or filed earnings the any forward-looking mentioned required the company’s by could Except risk and to otherwise. undertake statements herein, events

greater period. much that as adjusted comparing be measures particularly we and today’s underlying basis. possible during ongoing will on And Limoneira’s financial more on results these call, We that adjusted an are non-GAAP from an a discussed operations, of items basis. understanding to complete can detail results period any of financial please as provide adjusted when measures, results note discussing We believe facilitate analysis including on

financial EBITDA, EBITDA, and press A been include Also, earnings remarks, adjusted within loss per diluted the financial reconciliation adjusted adjusted are posted the non-GAAP measures. in most are earnings adjusted release, release today’s its which company’s we comparable included of EPS the has to were measures share, website. in GAAP diluted which and prepared net per directly company’s

it CEO, company’s Edwards. And Harold my turn to and President that, is the pleasure the Mr. over call with to

Harold Edwards

third work publicized John, in everyone. heavy delaying our and and were quarter, ranches by well rains lemon second year inventory. first a I'm afternoon, highly and softer for of avocados as lemon Thanks, in our XXXX. the good the with of through the surplus harvest few performance pleased portion half of quarter A fiscal to continue California, markets the pricing lemons into as as impacted

recent with XXXX our to rains, Even year lemon achieve fiscal guidance. expect the volume full to continue we

builders also at are experiencing the second project phase from for strong We development Limoneira. residential Harvest interest our of national

net in of doubling for fiscal XXXX per the $XX million revenue diluted over approximately generated to quarter share was and quarter million of in year. share earnings We or income year adjusted per last second diluted $X.XX the compared $X.X second

the at second position million our implementation debt end the continued of business at end from the Our reduced net million year quarter was to of $XX lighter the fiscal due model. fiscal XXXX to asset $XXX of

consistency business sell share, non-strategic completed transition six have increase reduce fully right-size proceeds. a months over will four XXX this million capital. the begin fiscal and of pivoting and already be improve for nine sale EBITDA our operations XXXX. model for of the sheet plan we dividends identified return is Our balance in to of The our earnings, on that towards on next of streamline XX asset in to the benefits per our This year will million months and $XXX in we plan now the involves strategic total realized expect improve that our assets, lighter the debt, a invested assets approximately closed past and

We have identified XX months. the we that million next monetize over to plan of assets remaining $XX

million cartons grower continue top of those results significant improve of assets with We Harvest to to and positioning partners executing of One all additional identified of to expanding sold, close monetize assets on in new bottom which our and initiative us World XXXX. all our balance to make nearly line progress year at are transforming Citrus fiscal strategy certain from with our the non-strategic advancing recruitment Limoneira, X sheet our and

the fiscal to properties, of The XXXX, much following total sold enhance Northern XXXX, used the XX, model. of which proceeds to our pay company's January domestic lighter our resulted the in million. debt. of beginning were transactions we've we net down On proceeds Since asset achieved business $XX.X

packing, harvested As lemons one and services period. services Agricultural marketing Prudential entered property an grower, for to packing, management part Limoneira into the transaction, minimum a a provide marketing of entered a for five term of selling and on related Investments provide farming to property agreement services and year agreement this initial farm the into to for

expand and way partners This plan on reduces of with we our economics margin our $X and as basis. EBITDA piece to transaction squarely Citrus focus World pricing partner Limoneira and business It grower fruit. The leveraging of leading services extremely earnings per on our using $X.XX in no the is additive a of costs more and farming of capital packing, targeting forma fits with outlay. per an with to One to marketing on of share using strategic volatility global the rising will grower pro selling asset impact carton lighter our be additional attractive

Even acres of farm and rates. feet rights, water XX,XXX pumping with we owned after approximately to usage acre asset XX,XXX rates continue the over sales, non-strategic

our water by finding or rights our assets rights over great investments. acreage, following the opportunities appreciation for are pumping significant monetization for We leasing either water selling

reduce of seven River derive to rights. Interior from is A near acres These forced be third a rights the Arizona water that water. by right to the water the the Class those Department come the Class opportunity instructed for go first River and we farmland in and Colorado to The Yuma, associated from the water will term that of cuts X X,XXX will water Colorado Class their have states like their way water with monetization X rights senior has rights has all X water intake pay states down.

to farming with and California XXXX. year There we Thomas acre terms entered Under $X.X on and we proposed In X,XXX total an Fire advantage and Edison we expect in more is net urban settlement a new April related were of divert to May of of and agreement, XXX Edison this $X receive the of water Company program plan take XXXX, our to we XXXX, received Southern a into settlement agreement use. shortly. which of any of detail following to million. approximately $XXXX formally with International resolve of fiscal a from we costs. to In provide to legal settlement other the Mark related all the million claims will awarded acres

XXXX, Also that of leased unviable determined were in of Cadiz citrus at economically operations farming agricultural on Ranch. the we April land XXX acres

eliminating million and dramatically ways in fiscal one on property, disposed disposal farming of of unprofitable of as XX, expect result, by many is operations. $X year we our of equipment of XXXX move and plant related ceased This a loss April XXXX. recorded to the As prove we operations, non-cash the assets a margins

into Apeel’s oxidation, with coating licensing an reduces Sciences. In will the we with edible for supply May exclusive XXXX, of the our and relationship based protect Their chain. preventing This moisture technology. technology longer lemons maintains entered non-GMO Apeel across leading chain coating throughout supply spoilage plant

their bright For lemons, this retain means yellow and juicy color they longer. for stay juicy,

As affiliated through availability the management. Apeel packing first facilities internationally and United lemon licensing fully significantly protected will Limoneira Apeel of domestically we lemons supplier through and integrated in States, expand

tested third-party quality our and conditions. retail and which a customers are that approach with quality Apeel asset model lighter the stored loss, product all market of merchandised, more technology This demonstrated Apeel’s service produce. the in food investments In that of in longer Limoneira, through regardless significant an very strategic continue attractive quality and coatings. become including develop highest partners grow position our freshest how the for exhibited compared and providing when to shrivel to retain of or supply improvements or refocusing reduced change our business bronzing a in protected protected other trials color technology bolster difference by we includes opportunities demanding citrus improves water to expansion our conducted and they sustainable allows its appeal to to Appeal lemons our chain. fruit, to ambient lemons to best-in-class of Because grower validates services for

This market. one marketing obviously strategic in throughout approach team enables best the grower fresh rates the utilization partners. to successfully sales our with fresh to important lemons an fresh market with and Our the of year utilization draw is

fresh In that first-six came of from an grower orange and closer grown these packing to to global year source maintaining is locations. partners certain number packed goal XXXX, months our lemon reconfiguring our the the on U.S. partners. by roughly lemon to globally, of while marketing network. working of our also still volume packing are basis. and acreage XX% lemons We grower fiscal better annual our on reducing This the support includes and XX% have lemon

our XX% both million development quarter projection proceeds fiscal harvest timeline In years. end by cash announced Harvest expect pavilion for generate the the Limoneira. to increased of our across fourth of proceeds ‘XX the development year million project We have harvest that $XXX full in to $X include and addition, million and project medical the we received highway. and fiscal the the over we at $XXX December the real first over We seven of updated estate at our this to

first with the the homebuilders develop this Interest to Paula announce in the project Santa resulted to City will units. in participated successful that later is up currently recent in We project. that X,XXX this believe approved negotiations with The phase second and XXX has in we units we residential are year. discussions of X,XXX development this be phase units of to the expand national additional able to of

more the to expect We coming have this information months. in on

now a next clear that have we path and to sheet is what very earnings. EBITDA, balance stronger So and strong flow for cash Limoneira

value. months, see on the business the best transition of focus assets shareholder an lighter model enhance to XX next to you Over and can asset our to expect our use continued

leverage real long best and marketing to packing, properties value. order Our to with our of water agricultural continue distributing to how expertise board evaluate and enhance team and rights management, farm portfolio shareholder our in in valuable citrus term management estate combined will lands,

that, And with over I'll the call to Mark. now turn

Mark Palamountain

Thank everyone. and afternoon, you, good Harold,

it nature the are quarters annual, view seasonally not fourth softer. to business. and our quarterly reminder, seasonal our As due our and quarters, basis, is stronger best on quarters of first are third to second Historically, a business the an our while

XXXX, year quarter million year. $XX.X compared million Agribusiness million of revenue net in fiscal of the in to fiscal $XX.X second total $XX.X previous compared of last million For was second quarter net the revenue revenue second the was year. to quarter total $XX.X the

In Limoneira Fire Thomas a total any in agreement year settlement into April settlement XXXX, settlement related of company awarded the claims terms Edison with Southern Company the California the agreement, entered and million. was of all Under formally resolve, to fiscal XXXX. to a the $X

received was settlement year XXXX, of $X.X on net recorded revenues approximately $X.X and of of quarter legal million recorded considered lost was Limoneira legal XXXX. million costs, and the which May gain in fiscal of In related Agribusiness second revenue in $X.X in million and

for XXXX fresh million period fiscal and compared million during both quarters revenue year year lemon second fiscal $XX.X was quarter sales $XX.X the operations XXXX. of million includes of year $X.X Other revenue in the in XXXX. fiscal to same Agribusiness second XXXX the of

carton approximately of lemons. quarter million second the the proceeds average XXXX year quarter fiscal $X.X $XX.XX at year of sold X,XXX,XXX during lemons fiscal cartons a XXXX per cartons second price sold year to carton fresh Approximately to at price in of the per XXXX. of average second revenues were a allocated quarter include Lemon during X,XXX,XXX $XX.XX of settlement compared fiscal

slow a and in the challenging of fresh fiscal partners. we second cartons XX% and Of first X,XXX,XXX quarter from remained of small are in year. we and procured packed the beginning a Lemon of while X,XXX,XXX year to sold half pricing XXXX year were has XX% fiscal XXXX rise the recovery of respectively see grower second during half price this lemons expect respectively, and the for U.S. XXXX

of to was second company occurred during the the rainfall year quarter of of quarter the avocado the quarter XXXX, fiscal heavy The million harvest timing avocado revenue that to quarter. expects the quarter in fiscal of recoup delayed the and first XXXX recognized third for in Due second from fiscal year $X.X first the revenue year initial delayed the XXXX. into remaining

quarter the XXX,XXX of settlement XXXX at of avocados fiscal pound at allocated pounds second fiscal avocados. a of in Approximately second $X.XX year were approximately Avocado aggregate million $X.XX included quarter to fiscal of pound proceeds during sold sold year million during of in compared $X.X a per XXXX revenues pounds second quarter price average average per to year price XXXX. the X.X the

oversupplied We to and from of fiscal quarter fruit year XXXX continue in year Mexico by exacerbated to the company compared avocado are there's the with the coming revenue XXXX. orange $X.X XXXX. of market million million currently lot in of quarter going The dealing an for to second price of fiscal avocados year second fiscal of Peru, recognized in $X.X pressure a

the million second year average of revenue of compared year per $X.X the cartons year during year at XXXX. Specialty fiscal other sold quarter second during $XX.XX Approximately XXXX. XXXX million per compared XXX,XXX was carton, cartons average the approximately carton to XX,XXX price and to second a XXXX sold in oranges a fiscal of citrus price second of of quarter quarter fiscal in at quarter were the fiscal $X.XX $X.X

in reminder, orange our specialty our almost and acreage acreage of transaction. XXX% of we all Northern a As Properties citrus sold the

and fiscal second to million, $XX.X $XX.X of to of Ranch Cadiz was The for cost the year million primarily were the expenses second $X.X assets. due XXXX compared million quarter the quarter of year. in last disposal of increase Total the

the part interest asset earlier, plant to asset Cadiz of per $X.X that an with towards as the loss million As property, asset model operating was was a decided we cease at an Ranch in and approximately operations equipment. to farming company's company's the of related business of spoke lighter shift and year and best Harold it dispose

XX, on loss million a of recorded XXXX. we of such, April assets as $X As disposal of

second year million year the previous the dividends stock $X.X applicable of XXXX. for fiscal million of fiscal Net the of loss compared of XXXX for fiscal common year. quarter in $X.X after quarter stock preferred was million $X.X common compared million second of loss Operating quarter was to the in income fiscal income operating XXXX second year to to applicable the second to quarter net $X.X of

income Net for same year XXXX. income loss for the per of for to year fiscal fiscal of share $X.X year earnings share was quarter of $X.XX diluted to the diluted XXXX diluted same XXXX of the fiscal second in second net per for compared period share period quarter the fiscal was $X.XX of net XXXX. compared per Adjusted year $X.X million million

the year per $X.XX A loss at per net second diluted to income income is to income of of release. provided share fiscal Limoneira to end net or compared Company Adjusted for loss per adjusted our net the income net diluted share earnings XXXX. of or quarter earnings $X.XX diluted adjusted attributable reconciliation for was of share

XXXX similar Company income of in year reconciliation A Adjusted release. to year EBITDA end or to provided of fiscal XXXX. the also EBITDA net to is at attributable period quarter of fiscal our the the Limoneira of earnings loss million second $X.X adjusted was same

our down million year X, fixed and which Those million to line our XX, of liquidity. At debt pay of as XXXX. sold non-revolving end to $XX is used beginning Credit properties, the domestic April $XX.X resulted now in Farm proceeds debt X.XX% the XXXX year, $XXX.X sheet except of until XXXX. at was at the July AgWest total Northern million of of Turning term fiscal compared credit the all million. to we net which our $XX.X proceeds of were balance Long

resulted cash million quarter on position hand $XX.X XXXX Debt XX, levels at debt minus of a net of end. $X.X million as in of April

improving have sheet. million we expect months sale cash reminder, in of in for a XX EBITDA assets over As remaining $XX no with to will opportunity our balance their the on non-strategic monetization have a result and next debt position the combined

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

Harold Edwards

million be fiscal X in for to up XXXX. total to million of XXXX. lemon million from X.X cartons This X.X fiscal believe year volume continue We cartons year range in cartons sales will the is

but pounds XXXX, lead slightly third continued wide our orchards higher year of will pricing the to impacting production our volume quarter to and industry X factors Due we to expect pressure, be for For million a of reflecting fiscal believe experience XXXX to X lower orchards, we now adversely the to weather in expect prices. pounds of million pounds pounds. related avocado range the fiscal compared range year million X million to to X previous

year XXXX due it's years for high note the avocado year experiences was and typically record California while physiology. of alternating Also, to fiscal production a to important that low revenue, crop plant

receive seven continue proceeds the the from Builders received of Limoneira II we XXXX. million with addition, to in and year quarter II $X and fiscal Community Limoneira at fourth expect East of $XXX of In to Area fiscal the addition million Harvest already over years, spread

is to $X year cash fiscal XXXX to projections XXXX the II generate to to followed: expected XXXX $XX is $XX XXXX year Our fiscal year be to fiscal $X million; fiscal XXXX is medical million. and in expected January as our expected Limoneira; generate breakdown include expected updated fiscal is generate $XX $X development. XXXX generate year expected fiscal expected in million; to generated campus million; $XX East million; were to fiscal Area flow continues of million expected to is year million; year year XXXX to generate is The cash generate

of sale in sale of $XXX to the of we previously next nine XX thus as lastly, with our expect $XX non-strategic remaining identified and announce million the $XXX We've assets months. the sale. made million executing progress months far great for the past have the million stated, plan And against in

call Operator? to the that, I'd And open to your like up with questions.

Operator

Thank you.

We session. Bienvenu conducting now from a comes first will [Operator your with question. be with Instructions] Stephens. Our question-and-answer Ben proceed Please question

Ben Bienvenu

my Thanks taking so for Hey, questions. much everybody.

Harold Edwards

Ben. Hey,

Mark Palamountain

Ben. Hey,

Ben Bienvenu

I move kind you. to be are dynamics through for how I'm to more normalized favorable number the segment under and many the of just of lemons view to curious, about of than want for contributor back pressure of the start ultimately the or Obviously, a we positive more a of balance So as lemon there from eventually so fundamentals could think company to what on about the year a the your view But you P&Ls of your getting what earnings give business. us if been years. on path business? just we of kind I'm is contribute little that going have a think you bit to have this and markets, specific kind could that curious If you we negative. this get

Harold Edwards

for begun a great question, were focused different different That's that of is the Limoneira and financial our you on of producing. we've impact question our answering put a helpful together But economic places we been that Thank question analysis the in P&L where on showed Ben. pivots. really as valuable that really at team of the influences we've sort and

And so challenges. the were first our thing was really out the where improve to that we we did to areas to set eliminate having

in in the environment low And this area is the price, high desert first cost just very Yuma, Arizona. in

the out coming production better pricing low on And of results believe the there Yuma. programs see of that solved with and even by our profitability value think much the with in so valuable our Reclamation, environment, we've in reduction the cost area. And this revenues you'll that production lemon of and these program taking increase but actually that significant our we advantage opportunities Yuma, Bureau we our out to reduce increased of of problem our following focus there, following actual but because

low We've to The the low really that lemon provider were Valley. and a a those results coming those pivoted lemons profitability that we where and production. low this our pricing struggling from San in XXX% pricing service seller environment marketer and of with of cost to before with the high be were cost, Joaquin packer

packing lemons the house, it's Finally, is other areas Ventura County producing. cost have significantly just better in of close the it's actually to the we we're moving logistical than where those our production very that because

of So even as environment, a generate we a those result, out pricing opportunity lemons. to this low in value see great

is a production Cadiz this The think grower elimination just on the problems in had those will of and Santa should then and do of to only I thing in our cartons operations we've contributions have problem Ventura in the farming see priced in real offset we but simple profit final lemon business. part by focus operations to to supply in needed and announced, that that's So stay was our the our caused environment as swing in was in first and XXX,XXX problems your really from dramatic eliminated low which about at partners first from answer same in that and oversupply. areas assuming supply those we our with Cadiz And we of area. the It the we actual time that those solve streamlining the stopped to a areas, the question very and chain. amounted County our in Paula the in really that's unprofitable

that we're which improvements puts are confident significant higher for position us see that's because in world will in other the production that the to parts wait seeing demand price, tactical will balance out, we to supply going come how in of also into come, to just sure the reductions But not and for supply. of itself between production starting see that We're you're California, only the but manifest take going long to our to districts in changes in running business you're and get the way to we're some three time Arizona take there. good not to a --

Ben Bienvenu

Very up side Obviously, into That's volumes gears considerably. business. are shifting avocado are U.S. coming the Prices Maybe to helpful. Okay. the the great. of down.

of you're weaker of what been been by versus consumer has of dynamic that How backdrop? your a impaired sense parsing that experiencing, at demand? out? demand kind all supply is under volume has noted You with And the prices is much what pressure,

Harold Edwards

has the weird year. year year's a the by last a as know supply supply, driven that demand. but the it larger last crop you catch took Mexico up was while for remember big much supply to the huge dynamic was chain Certainly, chains year-on-year in than pricing And drivers to disruption this back sort temporary, of

things and that and demand I've supply noticed of turn this we but Ben tends in off in high. the seen before prices, have of disruptions see time when high you gets a career, One for so these chain you period my it to these really because the pricing

while get And because during in you're the much unsustainable time so it's it's higher of glorious to a where that because that sort achieving elasticity prices get pricing. marketplace, higher because high the and period producer consumers as profitability, turned in of off you place

that much environment. we're high you by for your avocados, a pricing at were more the and before much, takes off up normal the see while turned that people Now to pricing to back value demand back supermarket catch because

period in have now. the demand before, So fall pricing I back year-on-year the this But fully high we've will now, up. confident right that was environment seen actually catch lag just off we by driven the really marketplace. we've we're it seen seen demand really I'm lag. through going right it

Ben Bienvenu

could. last for And then I if Okay. question me,

desire sort of is rights? of strategic you in. rights, is what that monetize market and On the I'm what monetization about arrangement water or following some potential your the And you'll programs the to in engage the curious, you appetite what participate your of for appetite? one, actual outright with sort that water financially talked purchases

Harold Edwards

three we a that we give The us place opportunities for I'll farming acres about put dynamic River sort on answer three And XXXX. government the So may what they XX for drive agreement vague that new the a draw a additional the towards have are is year because that -- states place current will they out is assess all $X.X year a following but next federal XXX the of the to end you of as you water agreed so agreement that just by years have not will the river the said come and we'll deal off that's the agreements and presented. in followed said, that then interesting. their Colorado has but seven sort But program by to need XXXX. put in revenue of million

to are is water. government the of next the all a that is that scenes, decisions federal trading who of of deal the of third made buyers the and consumptive a be the But and who of lots there's cut are there year behind So the sellers goal are for is believe horse negotiation that being $XXX of acreage at of foot river. XX use will foot. off following potential We an of could for $X,XXX round take else, be our right mean hearing following this we'd have values out go part We're to somewhere in $XXX values. from significantly deal an The but that supply program whispers supplement lucrative higher for us. we now water are for which extremely chain have acre all acre of that would to not production, to the the the and

of a water it’s value. focused at as outright looking at is. actually hedge what York, their that knowing play sort partners a plays you also one And and of all with be to New the in fund best this out figure we're acreage that's of to on know, it may acquire Now their happening, best trying

and it's engaged which for best to our we're sure to so the it's go. discussions whatever and that way going shareholders. decision we're determined make our in we're decision those And is evaluating But we're both sure not

Mark Palamountain

And that's out especially the are one being Ben, just add may cities in desert. I proactive, these out thing other if there of is some

foot, As number of rights which an (ph) acre the a $XX,XXX we there. about based out $XX,XXX, water saw against City big pay our Buckeye is

come see industrial and so looking for this more towards much period dries well. as types the and I year future, approaches cities think as sort of you'll And and people three water up are

Ben Bienvenu

Thanks good. so Very Okay. much.

Operator

Thank you.

Our Raj Securities. proceed next question. Please from question comes your with Sharma B. with Riley

Raj Sharma

light for question. answered. Yeah. that that's outlook little have questions Few out. the focus part has already bit asset been we my of my spelled been not Thank a of taking sort only Can on the you

you to You've there a plan about in of and to, about please? amount and want is you year the that XX year come from? where by cartons that, talked about the year past sort where can going five the production or you this are this the number any to of cartons talk we Could next level third-party should expect take of talk

Harold Edwards

Yeah. for Sure. Raj and We'd it's you Thank great question. to happy be a that.

in us. we the available to to lot driven the that were had question a packing answers by capacity much of So past how

so theoretically, today sort utilizing the some in But cartons also our of know, facility. by going And the And million of washing capabilities still a facility as are to as you storage come where we and has Oxnard from capacity Santa district. evaluate lemons we're Paula X annually.

three, supply which reduced that that because district the water believe pressure is is we part actually from chain desert, the going of be Colorado the So of River. to

at growers going of we And on expansion that we see that what's production the supplies and then opportunity because that supplies going with large San are those look in the the with actually lemon think area. increase we outside in to Joaquin Valley, of

now we're capabilities right packing an think optionality something is growth. So area looking having that's and additional closely because lemon that we in pursue valley of the us at

about early think spring, we that's as lemon. the lemon Finally, and the the coast that's summer

We cartons million X have capacity there. of that

perspective from target cartons the five three in try that manage all of it call have I years the next it, we per to growth want to XX think annum. we an million to of that be while sort a to trying a to But sort of of around fair volume about all get somewhere XX% internal and to

Raj Sharma

(ph)? and XX% packing third-party including per the annum, shift of growth Volume

Harold Edwards

third-party, the is that the with fruit. some because still coming online. of third-party growth with will lion's do from Mostly acreage But that younger share we have grower come -- partner

Raj Sharma

And to flow it. expected through or? Got now is that years across next five be evenly to

Harold Edwards

I year, say to that, it's By think fair yeah.

be that's a that. to I it won't it about thinking that, how you're close exactly be but by If We should year. do modeling from perspective, it

of in The because district but that's you're seeing water other expansion, contraction so three. dynamic is, also

But as to we're per think I And what volume factor thought can in to the year. probably accomplish. So if the growth here as that's part about growth. we a balance of it get. good we're number to That's XX% of trying that we calculus terms overall trying in that's

Raj Sharma

-- a that you'd million Could just understand if also they year I you'd because year follow questions of be triple quadrupled simply double? come your have could would rights, Did then double with an the more And and of pricing requirement, actually the $X.X you would -- you. on Thank do to would couple acres number a correctly? Yuma. back a water also XX

Harold Edwards

That's right. Yeah.

Raj. that, So rough the math here's on

we allows And acres, XXX us have three we us we foot. we've are acre that's us feet they've half they've times $XXX and -- just acre followed -- program X,XXX entered year that acre it. allowed our the allowed followed to an acres So X.X follow that to per to get of

per that $X,XXX feet So X.X of and times opportunity what they offer value like the directionally we of it acre acre we've what something X,XXX whatever an so be which to we acres acre $XXX next all going acreage, the is believe that's would heard is foot. whispers times at point actually be to

Raj Sharma

Right.

right, money, could actual quadruple. the So

Harold Edwards

It could. opportunity sure And Yes. why that's event presents we to itself. make the that want in that that we around stick

Raj Sharma

And that you. million. of the it. could cost? Thank increase please numbers the the the Cadiz, cash? lastly, operating is you non and the explain in -- in that the Got Cadiz then loss the in you the Is quantify Can operating X costs entire is

Harold Edwards

Yeah.

all So it's non-cash.

the Half section there. had one We the invested $X we there go pink which didn't we've was and million well. out trying. were So which XXX acreage acres, experimented lemon in of

decided really three operating still costs. million two $X.X side on having while development to the million were $X anywhere from we as losing last we the years, so And

essence, operating year placed in trees the So of $X.X also because in some -- were those million yet. those not $X.X million development loss last had service of about cost of

no cash brainer And $X the was so of it on million really and $X out. a million

first why to answer dramatic quarters there. in that's So that asset see we relative fourth your to and a we're our shift question? Does that think going in

Raj Sharma

gets So things. non-cash reversed. million loss gets $XX loss, your out operating and $X.X development Obviously, million taken that on that $X.X million those

Harold Edwards

June middle asset you've in payment were just Correct. some desert. we the part really year Cadiz that in at go the offset timing and Yeah. to Bernardino sense it's other lot our and nowhere as a made been seeing gains San was up relative the of coming this And to here the a if it out of the of tax forward in

the transportation And so losing about that. was a We were killer in $XX carton. a

huge So received for should it and it's I make difference very think well at the the day, going us. end of a be to

Raj Sharma

Thanks a I'll my questions Great. Thank take lot. offline. you.

Harold Edwards

Thanks, Raj.

Operator

you. Thank

Ben question Capital next comes Lake with Markets. Our Street Klieve from

Ben Klieve

you two exactly press here. and prepared is really and of Harold, noted. of Apeel of the some either to couple taking what about keep All questions. from degree In that would for questions the was in didn't here. intend the right. I the my the but two bad is release this relationship that agreement to refer Can talk promise between promised Thanks or the Limoneira remarks, element to you. exclusivity about relationship that the there a I of that's between your the you was you of which exclusivity And there review I Apeel? perspective you A

Harold Edwards

I'd question. be Ben. to, Great happy

they've So various we've success the challenges relationship sold and vegetables in some into the formation along and on interest thing have challenges with the first one ran is and been ways science. other that their been their models team commodities way their think they but since have were with absolutely fruits the the structured that friends many, Apeel they've because efficacy The started. of progress great since the with in had their business we with of we worked as some relationships they've they suppliers. and followed many application. The that the And good their had with they've of other science

food James envision coated In their and stop relationships out initially tolerate probably CEO, complete of will is the be not the this the to for way establish supply eventually and that customers service one retail lemon we case, customers is to all the able Limoneira and this major Rogers obviously Apeel’s Apeel particular Limoneira Founder globally. United basically And shop supply. partner. opportunity having States, chain will place in be came customers us a to the go handle that us take offered we to to the be will lemons And will single -- but with source and nor idea the

Limoneira So the amount which what for have then suppliers. of work they'd we'll additional partnership supplies do is, we'll or that on sources we a licensing them to work the with And like and partners with arrangement provide set collaboration strategic of as will very of determine we the supply go customers on can customers that Limoneira. supply those closely alternative up as to with part other the of then the our customers

which be relationship to that will doesn't analytically dream of customers the if on you maintain say, account. okay, very careful relationship, and need we work supplier we'd account, the we'll to coated a if to one be and instance we'd Walmart massive such be able mean to to that will Apeel. only buy supply strategic bit, the That exclusive so out full but they're lemons with little is the for because go with choose partners And to like XXX% just a for supply with got it necessarily

service best just customer a So And them at them. all that customers/ solutions itself will across that for time to would to try one retail for provide we're food and and go transcend going work

Ben Klieve

Harold. Very Very Thank helpful. you, helpful.

follow-up stimulates questions. then of that So a couple

follow-up think, been Apeel, first time. the So pretty for of is has some I well documented in journey

just other from strikes we've so as your what described me sources. exactly heard And what you

you given customers you science that they given this is taking talk that about these hit had you of time your described, or the a bit little you how news. that also to this but challenges Are really customers life historically, on seeing they've the is something that income given take the have with can this So shelf benefits going are statement? to eager the to retail engage

Harold Edwards

and closely to I how a and have It's But will time. of logistical there's refrigeration. to It's chain. and worked to benefit supply the shipping bit do That and with customers channels is, simple things little and watch component of customers needs just of sort looks it think to that of work really temperatures Ben be how it distribution that applied lot it's going better of and begin there's on supply will the will as not is, how to allow let's in what this takes part ambient different like on where coating that's interesting, place. a places with as as it. much gets us experimenting thing other the perfected But new in can take be don't it it out so different certainly put shelf. contemplated applications and the on where a

tree, actually life about lemon post-harvest, One that environment. thing by over that's is spent consumed interesting to it's from time of the the is a temperature lemon's time ambient that XX% in consumer an it the from leaves a

for actually consumers. user end we better ripening sort in reduces ultimately of our be or the going eliminates ambient have temperature. a much It's coating So a for experience if that to just customers that and then

a it on them to achieve prefer the actually time. but -- delivering. customer And than our answer to it's is, to under rather I overhyping one over and as promising original communicate as question, a So successes time that of we we'll end think front and the at the kind

Ben Klieve

Got it. taking as my makes look successes good. Very to hearing here That back forward address it line. me. one? other That questions. about sense. I'll interesting, come. Very my does you they in for Can those get Thanks for

Harold Edwards

Thanks, Ben.

Operator

Thank you.

Our proceed Please from next with question ROTH question. Sweeney Gerry your comes Capital. with

Gerry Sweeney

Mark. call. Thanks for Good taking my Harold, afternoon,

Harold Edwards

Hey, Gerry.

Gerry Sweeney

you you're the the divesting you're down. going and start then top. Yuma bond a everything underperforming at I'm maybe for to just have tightening Obviously, Couple assets,

we at going packing, glimpse to this timing? et marketing, where is call think you've get X.X Obviously, X.X in better Limoneira a talked Limoneira will some money of I some go point, reinvesting is maybe I'll of of When about some even it for growth. into cetera. the sort

Mark Palamountain

question, Great Gerry.

April a and do so really strategic We And a that different things put July met had our to [indiscernible] ideas board. to we're and with We together working go we've the diligently over planning road been come this model. in I ideas going lighter session relative to to back asset with to map in for create forward. and to going value different got shareholders

our in able in relative more I we'll to to think there, call that. September articulate So be

to really spend and and we huge not being diligent we're what trying put a just the meantime, create to go cash back. But and in we're out in hurry

is ourselves holes the I net you will. earnings see getting of debt think as And the in these cash fixing ship, our improve sort and zero these all we position a first from objective. if

to with that out I us deploy ideas to come efficiently. think you'll see and capital creatively

Harold Edwards

filling And in our exceeds packing Gerry, capacities packing, our but providing serving by say has it's grow and and successful been, success and not partners for how just that if in expectation selling how terms partners and that's to marketing services initial existing on pile been grower profitable capacities, I been. could us of only

now new is the flames farm we transaction We the farm in completed fan with those as creating the very to result that a want them. continue grow that services gift that those recently in in asset a the But the in lighter for management idea honing closely and and providing opportunity given other So were way. really we to we're services. on in company focusing area division management the work to Prudential with of of of

can the our begin to amounts capital we without drive as incrementally light to for that so we're having trying expanding but to of new asset But of very then hold to you'll service in of continue could grow. which company, a significant value also on note, contract, think that about very on focused company that part deploy to deliver a lot to way best-in-class

now in. with have Mark communicate we're will it to out all really capital we we So that it be just the we that we forward. all after brought closely more areas put stingy trying move back said, we that those back be don't areas And just so there two as as certainly

Gerry Sweeney

mean, to here I getting plan. message we'll details later two, And over start the month working are year, right? understandable. It's going is you some Totally next on or and develop a this guys the

Harold Edwards

Perfect.

yes, say, Let's perfect.

Gerry Sweeney

that was What's changed on that previously, talked about area on if curious But being lockdown lemons. China, opening Is changed? priced Asia for there three, Talking four, maybe China great months about just like, higher has permanently but we Obviously, region? the up. in opportunity Has five in some lemons, going a ago, an always from, market area? there? that

Harold Edwards

say I there, to thank oversupplied is wasn't even what have for China situation because we the China think would worse. be goodness if

those exploring higher. those And creates the Hong has sources So that made of cheaper. been into those and done countries Asia Kong, of of been really price customer pricing to the our strength into the the And of Korea, biggest that's of that of or dollar cost what all enemy those in right have as the dollar Southeast supply in of base just because the and alternative those United lemons weaker Japan, the for have much, much our exchange. export foreign now in strength then door the into sort through opens into the currencies China, States we is begin from that's that

which what we're further and situation, into we're from us. Turkey which is from South of from seeing more ways is a so And to these the their much fruit creating fruit Africa seeing is to situation fruit and begin challenging find for competitive Egypt markets,

export shift a pre-pandemic, and that's great China, extent to into now pricing levels exchange to thought U.S. we we Hong So Kong markets balance rates reasonable before and certain Japan you whereas of in premium had high changed. Korea saw side and this as sort of of demand, and good when a significant those

that landscape So of you've of other in because these suppliers out duking these competition happening from challenging those that's more in every day a parity other got marketplaces. kind there's much it countries global were pricing and

today of were It's not So trading not They're the the for dynamic markets. -- great going they that's premiums they're on. just that's pandemic as at that kind they're pre us.

Gerry Sweeney

value but beaten, know it. right, than classes, there's there's that Because Class to If right? is Class and different four water does the then And and Water process obviously, less are is drought, esoteric, through III, have little even and help. the to a maybe classes work? presumably or select rights, think and levels? alluded multiple water different at program a Does even bit XX% senior, I been it. rights horse those, you're sooner a more eight. higher There's access Got water. those the rights I Is amongst if this you with which that’s seniority less How you

into level. So to you at curious city to programs a I approach rate but want the when level to as to have weeds, And that's sort or like it's works? of of these at that know at maybe level et doing But the water cetera. Buckeye, you're even state getting portfolio some how the high a

Harold Edwards

simple No, answer to question. I'll try it's great it a in a way.

been what of So an one there place. in XXXX, place. senior that states was it That treaty the off class seven the through XXXX. at put And the established eight. the the in that on law together put levels and being river turn river set that that's XXXX, And call since and treaty on put what accord got was was these One they expire been and the that to the who of the century, the rule with river the that eight junior. being accord junior, most was that's is

next so to for put three it's the now it’s by as that what's the So why third. pressure Reclamation on seven the of sort there river the of water its going Bureau total on that's life Colorado the end and are government deals years. a the consumptive reduce arm, to off off using negotiating its federal that are River and of use states it's is the together posturing put now being But at is right pull

holders going and the to cut is way the it, And keep right it's starting holders sell to right the owners use keep right get the or water so it it of or are junior have the ones initially that the just first outright. either it the water then -- it are the and senior and who water low are sell

that the that's so provided. we're opportunity And being

And of to or demand willingness so sell you've got not different it and levels it. sell

to right so it, they have in can want to that farmers water Valley it that have the continue want but with sell don't farm to Imperial a it. have You senior

Las in today at permanent you've lot actually the way better a least Scottsdale all asset got those grow to in to producers of lemon than Yuma, continue the that follow lemons. a opportunity owners and -- water got rights You've as water crop the growers us. proposition a the preserving and Vegas for value Who urban Arizona, as Phoenix us to users better the sell to like see much to

the to some noticed that willing you kind Arizona the money if states as preservation it And on place sort consumptive dynamic that's And see how a of that'll all of the And you're of at were And see much at and probably Feds the water, makes had willing cut bought never all that's until sense. taking the releases rights. who third those the the the this, see and as opaque to was funded river. of press the by fight you'll project the So government. sure in the having you'll and actual you the the use believe from individual federal have well day always end right esoteric now off for river. will really what starting some water the thrown fund as now housing offers of this Central of you of dynamic we be sellers buyers that and of

Gerry Sweeney

little I appreciate you to offline. guys Thanks. it. I'll bit it. in Got talk a

Harold Edwards

Thanks, Gerry.

Operator

the Edwards comments. closing Harold Thank to to floor you. back over would I like for turn

Harold Edwards

you interest Thank for your you and much Limoneira. and Have day. very in all thank questions your a great

Operator

teleconference. today's concludes This

lines your time. Thank at you You for may disconnect participation. this your

Limoneira (LMNR) 6 Jun 232023 Q2 Earnings call transcript