February 23, 2024
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Limoneira pleased by FY2023 despite revenue dip

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Despite a 2.5% dip in fiscal year 2023 revenues compared to fiscal year 2022, the CEO of Santa Paula-based Limoneira says he’s pleased with the agribusiness’s year-over-year performance.

Limoneira has made several strategic moves to improve its financial health this past year.

“We achieved our full-year avocado and revised lemon volume guidance despite harsh weather conditions and softer lemon pricing throughout most of the year,” Harold Edwards said during a Dec. 21 earnings call for the most recent fiscal year and its fourth quarter.

Both ended October 31.

The 130-year-old company’s fiscal year 2023 revenues were $179.9 million compared to fiscal year’s 2022 revenues of $184.6 million. Limoneira’s total net revenues for fourth quarter 2023 were up 4.3% compared to fourth quarter 2022, $41.4 million to $39.7 million.

Founded in 1893, Limoneira is a producer of lemons, avocados and other crops with 11,100 acres of agricultural lands, real estate properties, and water rights in California, Arizona, Chile and Argentina. It’s one of the biggest agribusinesses in Ventura County.

Edwards said the company’s strategic shift toward an “asset-lighter” business model progressed in fiscal year 2023.

It’s reflected in Limoneira’s brokered lemons and other lemon sales growing year-over-year in the seasonably soft fourth quarter, he said.

The company’s chief financial officer, Mark Palamountain, said brokered lemons and other lemons sales in fourth quarter 2023 were $14.4 million, a 13% increase over fourth quarter 2022 sales of $12.7 million. According to Palamountain, The company saw no avocado revenue in fourth quarter 2023, compared to nominal avocado revenue in fourth quarter 2022, due to the seasonal nature of the fruit.

The progression of Limoneira’s shift toward an asset-lighter business is also reflected in the company’s farm management revenue, which reached close to $10 million in fiscal year 2023 compared to no revenue in fiscal year 2022, Edwards said.

Limoneira made progress monetizing or eliminating certain non-strategic assets, he said. It sold its Northern Properties for $98 million in net cash proceeds, extended a waterfallowing program in Yuma, Ariz. for expected annual proceeds of $1.3 million and exited its unprofitable farming operations in Cadiz, Spain.

“All of these actions have positioned our company to be in a stronger financial position with our balance sheet rightsized and net debt position at the lowest level since becoming a publicly traded company” in 2010, Edwards said.

That led the company’s board to announce Dec. 1 that it was exploring potential strategic alternatives aimed at maximizing value for stockholders, including but not limited to a sale of all or parts of the company, or a merger, he said.

Limoneira is unlikely to leave the area if it sells some or all of the company as part of its strategic review, Edwards told the Business Times Dec. 11.

Other highlights of the earnings report included:

  • Limoneira’s operating income for fiscal year 2023 was $10.8 million, compared to $2.2 million operating income the fiscal year 2022.
  • For fiscal year 2023, net cash provided by investing activities was $90.6 million. It was $19.4 million the prior fiscal year.
  • Net cash used in financing activities was $71.9 million for fiscal year 2023, compared to $33.5 million for fiscal year 2022.
  • Agribusiness revenue for fourth quarter 2023 was $40.1 million. It was $38.2 million for fourth quarter 2022.
  • Other operations revenue for fiscal year 2023’s fourth quarter was $1.3 million, compared to $1.4 million for fiscal year 2022’s fourth quarter.
  • Operating loss for fourth quarter 2023 was $9.7 million, compared to fourth quarter 2022 operating loss of $1.9 million, primarily due to increased costs and expenses.

Kavout, a Seattle-based AI-driven platform that analyses filings and stock quotes for investors, said that Limoneira’s earnings report “demonstrated a company that has shown resilience in the face of adversity.

“The management’s ability to meet full-year guidance despite lower lemon pricing and harsh weather conditions is commendable,” reflecting a cautious optimism, Kavout said.

While Limoneira’s year-over-year 2.5% revenues decrease is of concern, its “strategic decisions suggest that Limoneira is on a path to recovery and growth,” Kavout said.

The company’s market capitalization as of Dec. 27 was $379 million. Its assets are projected to be between $550 million and $700 million, according to its investor disclosure.

Limoneira’s stock price has increased 10.5% since the earnings report was released Dec. 21. It opened that day at $19.08, closing Dec. 27 at $21.09

The company’s stock price has jumped 38.7% since its Dec. 1 announcement that it was exploring a possible sale, merger or other potential strategic transactions. It opened that day at $15.30, closing Dec. 27 at $21.09.

Edwards said he was optimistic about fiscal year 2024.

“We are committed to advancing our strategic shift and believe the actions taken this past year have set us up to improve margins in fiscal year 2024,” he said.