The pandemic’s effects have depressed the lemon market for a year, as full-service restaurants and bars were forced to close indoor operations in many parts of the country, but Limoneira is looking at strong tailwinds in the market as several regions start to reopen.
In an earnings report released March 10, Santa Paula-based Limoneira reported net revenue of $38.3 million for the first quarter of 2021, down more than 8% from 2020’s first quarter. Agribusiness brought in almost all of the company’s revenue, at $37.1 million in 2021, down from $40.5 million in the first quarter of 2020.
Limoneira’s net loss for the quarter was $4.3 million, or 25 cents per share, down from a loss of $6.6 million, or 37 cents per share, in the first quarter of 2020.
Limoneira’s stock closed March 10 at $18.57, up more than 23% from the same point in 2020 and up 17% from a week earlier.
Fresh lemon sales, a major part of Limoneira’s business, totaled $25 million in the first quarter of 2021 and $27 million the year before. Limoneira attributed this drop to COVID-related food service closures, like full-service restaurants and bars, reducing the demand for lemons in the food-service marketplace and creating an over-supply in the retail marketplace.
In an earnings call on March 10, company leaders—including CEO Harold Edwards and CFO Mark Palamountain—said they were proud of the company’s ability to focus on other parts of the business, like retail, and they expect the lemon market to improve within the next few quarters.
A couple of states, like Texas and Mississippi, have completely reopened, and several others, like New York, Illinois and Virginia, have started lifting or relaxing COVID-19 restrictions on places like restaurants and bars. Because of that, Limoneira is already seeing increases in the amount of lemons being bought.
Alex Teague, Limoneira’s chief operations officer, said the company is seeing buyers increase the amount of lemons they’re ordering by 7%-12% each week.
Still, a stronger comeback in orders won’t be seen until states like California and the Northeast Corridor allow their food service industries to return to their pre-pandemic operations.
“We follow the vaccines,” Teague said. “As bars and restaurants open up, our business will get back to normal.”
The company might even see a surge because of relaxing COVID-19 restrictions. During the earnings call, Edwards said he is anticipating a resurgence in the amount of lemons needed by the food service sector. As restaurants and bars reopen, people in places where those industries have been closed for a year will want to go out and support the places they didn’t get to visit during that time.
“We expect positive, improving results in the second, third and fourth quarters because of increasing demand,” Edwards said.
Limoneira is also projecting that the retail side of its operations will see higher demand while the food service sector recovers.
And, unlike some other citrus dealers, Limoneira’s operations were mostly untouched by the cold weather snap that covered much of Texas and extended into parts of Mexico. That region grows mostly oranges and grapefruit, not lemons, so while there might be some impact from cold weather, it probably won’t be felt for another couple of quarters, as Mexican lemons don’t come onto the market until later parts of the year—which will drive up prices at that point, and should benefit Limoneira.
“We think we’re going to come out of this much stronger,” Teague said.