Release Date: September 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Limoneira Co (LMNR, Financial) reported a 21% increase in net revenue for the third quarter of fiscal year 2024, reaching $63.3 million.
- The company generated $13.8 million in adjusted EBITDA for the quarter, a significant improvement from $2.8 million in the same period last year.
- Avocado revenue saw a substantial increase, with $13.9 million in the third quarter of fiscal year 2024 compared to $3.5 million in the same period of fiscal year 2023.
- The real estate development joint venture, Harvest at Limoneira, achieved significant milestones, including the approval to increase the total number of residential units from 1,500 to 2,050 units.
- Limoneira Co (LMNR) reduced its long-term debt by 33% from the second quarter to the third quarter, thanks to improved adjusted EBITDA and real estate transactions.
Negative Points
- Farm management revenues decreased to $3.2 million in the third quarter of fiscal year 2024 from $5.4 million in the same period of fiscal year 2023.
- Specialty citrus and other crop revenue dropped to $600,000 in the third quarter of fiscal year 2024 from $1.9 million in the same period of fiscal year 2023.
- The company recognized a $643,000 noncash impairment of an intangible asset during the third quarter of fiscal year 2024.
- Fresh lemon volumes are expected to be lower than previously guided, with a revised range of 4.5 million to 5 million cartons for fiscal year 2024 due to late-season rains.
- The company anticipates lower avocado volumes for fiscal year 2025 compared to fiscal year 2024 due to the alternate bearing nature of avocado trees.
Q & A Highlights
Q: Can you explain the significant increase in expected avocado volume this year?
A: Harold Edwards, President and CEO: The increase is driven by a larger crop year-over-year and the strategic decision to delay harvest from the second quarter to the third quarter. This delay allowed the crop to grow larger, increasing total volume. Additionally, a temporary closure of the US border to Mexican fruit created favorable pricing conditions.
Q: How will the lessons from this year's avocado volume impact next year's outlook?
A: Mark Palamountain, CFO: We don't expect significant downward pressure next year. The alternate bearing nature of avocado trees means a typical up year/down year difference of 30% to 50%. Our renewed focus on avocados, including improved pruning and fertilization, has contributed to this year's success. We anticipate robust poundage per acre going forward.
Q: How are you managing your fixed debt position given the declining interest rates and strong cash flow outlook?
A: Mark Palamountain, CFO: The debt is due on July 1, 2026, and will go variable for one year. We are considering our options as interest rates are expected to decline. We have $35 million in cash equivalents from our joint venture, providing financial flexibility. We anticipate a lower net debt position next year.
Q: Can you provide more details on the strategic review and potential outcomes?
A: Harold Edwards, President and CEO: The Board is evaluating all opportunities, including the ongoing enterprise, an operating company/property company split, and strategic interests in citrus, avocados, homebuilding, land development, and water. We are pleased with the interest received but expect another quarter of exploration and deliberation before providing further updates.
Q: What caused the decline in farm management revenues, and what should we expect going forward?
A: Mark Palamountain, CFO: The decline was due to lower inputs like pest control and pruning. Our profitability is based on a per-acre fee, and we are looking to grow this business in fiscal year 2025. We continue to seek new clients amidst flux in the citrus industry.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
