Avocado marketer Calavo Growers reported March 5 that first-quarter profits were up 16 percent to $2.7 million as revenues climbed almost a third to $117.4 million.
The Santa Paula-based company said the first-quarter results set the stage for a potentially record-breaking year for the firm, which last year made a major acquisition of Renaissance Food Group, a company that makes wraps, salads and other fresh food items for supermarket deli sections. Calavo’s earnings came to 18 cents per share, up from 16 cents a year earlier, in the first quarter.
“In our core fresh avocado business, specifically, the company did an excellent job sourcing and managing costs on fruit from Mexico to offset the lack of supply from California — a hangover from last year’s cyclically small crop,” Calavo CEO Lee Cole said in an earnings statement. “This strong supply from Mexico also is benefiting our prepared avocado business, where we are seeing an improving gross-margin picture following several quarters of being impacted by high fruit costs.”
A shortfall in fresh tomato volume in the quarter, which Calavo said it expects will be offset by increased volume in the second quarter, did hurt gross margin and somewhat tempered results, the company said.
Calavo’s first-quarter results include that of Renaissance Food Group, a supplier of supermarket deli section items such as wraps and salads, which Calavo acquired in June for $96 million. “Looking at the Calavo Foods business segment on the whole, our [Renaissance Food Group] subsidiary performed well in its historically slowest quarter, which we believe bodes well for the coming periods,” Cole said in a release.
The Calavo Foods business segment’s revenues jumped 334 percent to $46.3 million from $10.7 million in the fiscal 2011 first quarter. About $35 million of the increase in sales is attributable to the Renaissance Food business, Calavo said.
Cole said the company expects “a strengthening operating performance picture, paced by higher revenues and net income,” for the full year 2012. “I am extremely optimistic about the outlook for Calavo during the current year — and beyond. The 2012 fresh avocado market forecast of 1.4 billion total pounds remains a precursor of good things for us. We are encouraged by the first-quarter showing in Mexico where volumes and fruit prices are aligning favorably. Calavo saw accelerating Mexican fruit volume at the close of the first quarter and that velocity is anticipated to continue, or even pick up additional pace.”
Cole said that Calavo is on track to beat its previous annual earnings-per-share record of $1.22 this year.
Calavo shares were unchanged at $27 in morning trading after the earnings announcement.[wikichart align=”center” ticker=”CVGW” showannotations=”true” livequote=”true” rollingdate=”6 months” width=”390″ height=”245″]