Region’s crop producers take stock
The region’s main avocado and citrus growers are facing two very different situations — one bright, the other less so.
Santa Paula-based Limoneira Co., which recently reported revenue of about $7 million for fiscal year 2014, along with a $2.8 million net income loss for the year’s fourth quarter is hoping to capitalize on increased packing capabilities and shed more costs in 2015. The company has also mentioned it is in discussions for more mergers and acquisition activity this year.
At the same time, Calavo Growers, based in Carpinteria, has been blindsided by a number of class actions lawsuits from investors, after the company announced its financial misstatements related to its acquisitions of Renaissance Food Group. On Jan. 15 the company also reported a fiscal fourth quarter loss of $208 million.
As a result, Calavo’s stock has faltered, and shares of the company are down more than 16 percent since Dec. 30. The company did not respond to requests for comment on its course of action following the restatements and how it will respond to the lawsuits.
Despite being thrown off balance with recent events, Calavo is still anticipating growth for 2015. The company expects record revenue and earnings per share in the year ahead. All the indicators are positive, CEO Lee Cole said in a statement. “By all industry and company expectations, fresh avocado consumption is expected to resume its upward advance in the coming year after a ‘breather’ in 2014 from the dramatic growth of the past decade,” he said.
According to industry forecasts, U.S. fresh avocado consumption, based on the all-source avocado availability from California, Mexico and South America, is on track to exceed two billion pounds in the current year, the company said. Additionally, the acquisition of Renaissance Food Group is expected to contribute significantly to the company’s bottom line.
“This fast-growth business unit has exceeded every performance target set for it, while expanding the company in a meaningful way into the refrigerated fresh-packaged goods segment of the retail grocery channel — one of the industry’s fastest growing sectors,” Cole said. “We believe this category remains poised for further growth and RFG is well positioned with a great portfolio of offerings, augmented by formidable product development capabilities. Its ability to produce on demand and strength in ‘just-in-time’ distribution have us optimistic about the future.”
Projected revenue and gross-profit margins in the RFG business segment are expected to grow by 20 percent in fiscal 2015, the company said.
With sales climbing in both the retail and food service categories, the company is confident about prospects for future growth, with revenue and gross profit pegged to expand by double-digits in fiscal 2015.
For Limoneira, despite a recent fall in profits, the company increased total revenue for the fourth quarter to $16.3 million, up from $14.3 million for that same period in 2013.
Limoneira recorded revenue of $103.5 million in 2014, up from $84.9 million for the previous year. According to company filings with the U.S. Securities and Exchange Commission, this 22 percent revenue increase is mostly due to higher lemon profits, which brought in $79.7 million in 2014.
“The increase in fiscal year 2014 was primarily the result of higher prices for fresh lemons sold partially offset by decreased volume,” the filings state.
The upticks mean the company’s expansion and acquisition efforts are starting to pay off. The Business Times previously reported that Limoneira bought a citrus packing house in Yuma, Arizona, in June 2014 and has invested in another citrus packing operation in La Serena, Chile.
“These acquisitions enhance Limoneira’s ability to be a year-round supplier of lemons and expand our participation in the international market,” President and CEO Harold Edwards said in a release. “We remain on track to complete the expansion of our lemon packing facilities in Santa Paula during fiscal year 2015, which, once complete, is expected to approximately double our annual lemon packing capacity and reduce per carton packing costs.”
For the fiscal year ending Oct. 31, 2015, the company expects to sell between 3.2 million and 3.4 million cartons of fresh lemons at an average price of approximately $22.00 per carton, and expects to sell approximately 6.5 to 7.5 million pounds of avocados at approximately $1.00 per pound. However, some of the company’s avocado orchards recently experienced freezing temperatures that likely caused damage to a portion of the fiscal year 2015 crop. The extent of the damage is being assessed, which is not expected to be known until the second quarter of fiscal year 2015.
The company expects operating income and net income for fiscal year 2015 to be similar to fiscal year 2014 operating income and net income as a result of higher anticipated avocado revenue due to the potential for increased production, depending on the extent of avocado freeze damage.