Limoneira reports revenues up but net income down
Santa Paula citrus producer and real estate investment company Limoneira reported on Sept. 11 a slight increase in revenues for its third quarter, ended July 31, but a drop in net income to $7.7 million, or 52 cents per share.
Avocado production fell by nearly half, since the crop bears in alternate years, but declines in production were offset by significantly higher prices. The company’s agribusiness segment reported a 1.6 percent revenue increase, and record income from the lemon business boosted overall revenues.
Operating income declined to $13.2 million, though, down from $14.2 million in the previous third quarter, due in part to higher operating costs from increased lemon volumes, and total costs increased 6 percent to $27.2 million.
Impacts from Hurricane Irma, which made landfall in Florida on Sept. 10, are expected to be minimal, said CEO and President Harold Edwards. He attributed some of the gains in the stock price, which had risen more than 10 percent since Labor Day, to speculations about the storm, but said that Limoneira does not compete directly with the region on lemons.
“Limoneira’s primary focus in our business is to produce, market and sell fresh citrus, and the majority of Florida’s citrus is targeting more processed products,” Edwards said.
Meanwhile, the sustained heat wave throughout California last week could impact volumes in the coming year, he said.
The company also announced that it had entered into an agreement with Farm Credit West, paying down its $68.6 million line of credit through Rabobank and securing up to $100 million in borrowing capacity, due on July 1, 2022. The interest rate and terms are similar to the previous credit line, which would have matured in 2018, Chief Financial Officer Joseph Rumley said on a conference call with investors. The company had $97.6 million in long-term debt at the end of the quarter, up from $88.2 million at the end of fiscal 2016.
Additionally, three of the company’s properties went into escrow during the quarter. The Centennial and Pacific Crest properties are expected to close by the end of the month, and the Sevilla property in October, bringing in around $7.5 million after transaction costs.
The company is still actively recruiting additional third party lemon growers and expects a 30 percent increase in output over the next five years from 2,000 additional acres nearing full bearing capacity or currently being planted. Lemon volumes may be lower than originally expected, offset by higher prices per carton, and it reiterated its forecast of $14.7 million to $15.2 million in operating income for the full fiscal year, for 51-55 cents per share in earnings.
A recently announced marketing agreement with Suntreat will also help it target new retail customers, Edwards said.
“By partnering with them with the full inventory of both of our products being visible to our sales force and their sales force, it allows us to leverage their products to sell our lemons into retail,” he said, adding that “more and more of our business is done with customers that demand the full market basket of citrus offerings.”
The company had $1.82 million in cash on hand as of July 31 and $26.9 million in current liabilities. Shares for the company ended Sept. 11 at $24.37, up 6.8 percent.
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