- Second Quarter 2018 Lemon Revenue Increased 28% to $33.6 Million
Compared to Prior Year Period -
-Second Quarter 2018 Operating Income Grew 51% to $9.4 Million-
- Earnings Per Diluted Share for Second Quarter 2018 was $0.44
compared to $0.24 for Prior Year Period -
- Company Reiterates Fiscal Year 2018 Adjusted EPS Guidance Range of
$0.65 -$0.75 and provides Insight into Longer-Term Growth Opportunities-
SANTA PAULA, Calif.--(BUSINESS WIRE)--Jun. 11, 2018--
Limoneira Company (the “Company” or “Limoneira”) (NASDAQ: LMNR), a
leading global agribusiness with prime agricultural land and operations,
real estate and water rights in California, Arizona and Chile today
reported financial results for the second quarter ended April 30, 2018.
Fiscal Year 2018 Second Quarter Results
For the second quarter of fiscal year 2018, total net revenue increased
17% to $43.1 million, compared to total net revenue of $36.9 million in
the second quarter of the previous fiscal year. Agribusiness revenue was
$41.9 million, compared to $35.4 million in the second quarter last
year, primarily due to stronger lemon sales. Rental operations revenue
was $1.3 million in the second quarter of fiscal year 2018, which
compared to $1.5 million in last year’s second quarter. There were no
real estate development revenues in the second quarter of fiscal year
2018 or 2017.
Agribusiness revenue for the second quarter of fiscal year 2018 includes
$33.6 million in lemon sales, compared to $26.2 million of lemon sales
during the same period of fiscal year 2017, with the increase primarily
the result of higher volume of fresh lemons and higher prices compared
to the same period in fiscal year 2017. Approximately 1,157,000 cartons
of fresh lemons were sold during the second quarter of fiscal year 2018
at a $23.42 average price per carton compared to approximately 958,000
cartons sold at a $21.50 average price per carton during the second
quarter of fiscal year 2017. Avocado revenue for the second quarter of
fiscal year 2018 was $0.9 million, compared to $2.0 million in the same
period last year, primarily the result of lower prices and volume
compared to the same period in fiscal year 2017. The Company recognized
$5.2 million of orange revenue in the second quarter of fiscal year
2018, compared to $4.9 million in the same period of fiscal year 2017,
primarily attributable to higher prices of oranges sold, partially
offset by lower volume compared to the same period in fiscal year 2017.
Specialty citrus and other crop revenues were $2.1 million in the second
quarter of fiscal year 2018, compared to $2.3 million in the second
quarter of fiscal year 2017.
Total costs and expenses for the second quarter of fiscal year 2018
increased to $33.8 million, compared to $30.7 million in the second
quarter of last fiscal year. The second quarter of fiscal year 2018
increase in operating expenses was primarily attributable to increases
in agribusiness and selling, general and administrative costs and
expenses. Costs associated with our agribusiness include increases in
packing costs, harvest costs, growing costs, costs related to the fruit
we procure and sell for third-party growers and depreciation expense.
Operating income for the second quarter of fiscal year 2018 increased to
$9.4 million, compared to income of $6.2 million in the second quarter
of the previous fiscal year. Net income applicable to common stock,
after preferred dividends, for the second quarter of fiscal year 2018
was $6.5 million and compares to $3.4 million in the second quarter of
fiscal year 2017. Net income per diluted share for the second quarter of
fiscal year 2018 was $0.44 compared to net income per diluted share of
$0.24 for the same period of fiscal year 2017, based on approximately
15.0 million and 14.7 million, respectively weighted average diluted
common shares outstanding versus the prior year.
EBITDA was $11.0 million in the second quarter of fiscal year 2018
compared to $7.7 million in the same period of fiscal year 2017. A
reconciliation of EBITDA to net income is provided at the end of this
release.
Fiscal Year 2018 First Six Months Results
For the six months ended April 30, 2018, revenue was $74.7 million,
compared to $65.0 million in the same period last year. Operating income
for the first six months of fiscal year 2018 was $7.6 million, compared
to an operating income of $3.0 million in the same period last year. Net
income applicable to common stock, after preferred dividends, was $15.0
million for the first six months of fiscal year 2018, compared to net
income of $1.2 million in the same period last year. Net income per
diluted share for the first six months of fiscal year 2018 was $1.02,
compared to a net income per diluted share of $0.08 in the same period
of fiscal 2017. Due to the Tax Cuts and Jobs Act of 2017, the Company
recognized a non-cash $10.0 million, or $0.67 per diluted share,
one-time tax benefit associated with the decrease in its deferred tax
liability balance during the first quarter of fiscal year 2018. This tax
benefit represents a provisional amount based on the Company’s current
best estimates. Excluding this non-cash tax benefit, diluted net income
per share for the first six months of fiscal year 2018 was $0.35.
EBITDA for the first six months of fiscal year 2018 was $11.2 million,
compared to EBITDA of $6.4 million in the same period last year. A
reconciliation of EBITDA to net income is provided at the end of this
release.
Balance Sheet and Liquidity
During the first six months of fiscal year 2018, net cash provided by
operating activities increased to $7.1 million, compared to $2.5 million
in the prior year. Net cash used in investing activities was $8.8
million, compared to a $16.0 million use in the prior year. The Company
contributed $3.5 million to the East Area 1 real estate development
joint venture in the first six months of fiscal year 2018, which
compares to a $4.5 million contribution made to the joint venture in the
first six months of fiscal year 2017. Net cash provided by financing
activities was $1.8 million in the first six months of fiscal year 2018,
compared to $13.6 million in the same period last year.
Long-term debt as of April 30, 2018 was $107.7 million, compared to
$102.1 million at the end of fiscal 2017.
Real Estate Development
On November 10, 2015, the Company entered into a joint venture with The
Lewis Group of Companies (“Lewis”) for the residential development of
its East Area I real estate development project. The first phase of the
project broke ground to commence mass grading on November 8, 2017.
Project plans include approximately 632 residential units in Phase 1. In
December 2017, the Company was granted a Recordation of Final Tract 5854
Map which subdivides the project’s three main parcels of land into legal
lots for the parks, schools, recreations area, commercial areas, open
space, and the backbone streets. The joint venture has begun Phase 1
site improvements and is currently engaged with potential homebuilders
in the lot bidding process, which puts the project on track to close
initial lot sales in the first quarter of fiscal year 2019.
Limoneira Lewis Community Builders, LLC, is a 50%/50% real estate
development joint venture between Limoneira Company and Lewis that will
engage in the residential development of Harvest at Limoneira. Limoneira
expects to receive 25% to 65% of the net cash flows from the project,
based on projected cash flow milestones, which are estimated to
aggregate approximately 70% of total net cash flows to Limoneira,
including Lewis’ $20.0 million investment in the joint venture, and the
balance of net cash flows to The Lewis Group over the estimated seven to
ten-year life of the project. The joint venture's results of operations
are expected to be recognized by the Company under the equity method of
accounting. The Company contributed $7.5 million to the joint venture in
fiscal year 2017, $2.3 million in fiscal year 2016 and an additional
$3.5 million in the first quarter of fiscal year 2018, matching Lewis’
contributions to fund ongoing development activities.
In February 2013, the Company entered into an option agreement for the
purchase of a 7-acre parcel adjacent to its East Area II commercial real
estate development project. In February 2018, the Company exercised its
option and purchased the property for $3,145,000. This property is
located along the south side of California Highway 126, directly across
from Harvest at Limoneira, and is suited for commercial and/or
industrial development. This property provides essential freeway access
to the project and the Company expects that development of East Area II
will closely follow the build-out of Harvest at Limoneira.
Management Comments
Harold Edwards, President and Chief Executive Officer, stated, "Record
lemon sales combined with strong orange sales and leverage from our
packing house drove a 50% increase in operating income. We have built a
tremendous platform at Limoneira and are very well positioned to
dramatically expand our fresh citrus offering nationally and globally
for many years to come.”
Mr. Edwards concluded, "As we enter the third quarter of fiscal 2018, we
remain confident the key drivers of our agribusiness that drove our
record first half performance will remain in place in the second half.
Even with lower avocado pricing compared to last year, we are confident
we will achieve our full year fiscal 2018 guidance targets. In addition
to our core agribusiness, our real estate venture, Harvest at
Limoneira, is on schedule and we expect the project to realize cash
flow from lot sales beginning in the first quarter of fiscal year 2019.”
Reiterating Fiscal Year 2018 Outlook
The Company is reiterating its fiscal year 2018 guidance. It continues
to expect to achieve fiscal year 2018 adjusted earnings per diluted
share in a range of $0.65 to $0.75 per share. Importantly, this guidance
excludes the one-time deferred tax benefit of $0.67 per diluted share
that the Company recognized in the first fiscal quarter of 2018.
Inclusion of the Company’s deferred tax benefit results in fiscal year
earnings per share guidance of $1.32 to $1.42 per share.
The Company continues to expect to sell between 3.1 million and 3.3
million cartons of fresh lemons at an average price of approximately
$24.50 per carton, and expects to sell approximately 6.0 to 6.5 million
pounds of avocados at approximately $1.30 per pound. The Company expects
operating income for fiscal year 2018 to be approximately $15.7 million
to $17.8 million. Fiscal year 2018 EBITDA is expected to be in the range
of $23.0 million to $25.0 million. As more fully described at the end of
this release under "Non-GAAP Financial Measures," the Company is unable
to reconcile without unreasonable effort the above forward-looking
non-GAAP measures related to EBITDA, and the variability of the changes
excluded from these non-GAAP measures may have a significant and
potentially unpredictable impact on its future GAAP financial results.
Longer-Term Growth Pipeline
These fiscal year 2018 outlook estimates do not include potential equity
income from the Harvest at Limoneira project. Phase 1 site improvements
are underway and the Company is currently engaged with potential
homebuilders in the lot bidding process which puts the project on track
to close initial lot sales in the first quarter of fiscal year 2019.
In addition, the Company owns 1,600 acres that are currently non-bearing
lemons and are estimated to become full-bearing over the next four
years. Beyond these 1,600 acres, Limoneira currently intends to plant an
additional 500 acres of lemons in the next two years that will further
build its long-term pipeline of productive acreage. The Company
anticipates this additional acreage will increase annual lemon supply
from its current level by approximately 30%, or about 900 thousand to
1.3 million additional fresh cartons, as the non-bearing and planned
acreage becomes productive. The Company also expects to have a steady
increase in third party grower fruit. This is all organic growth and
doesn’t include potential acquisition opportunities in its highly
fragmented industry.
Conference Call Information
The Company will host a conference call to discuss its financial results
today at 1:30 pm Pacific Time (4:30 pm Eastern Time). Investors
interested in participating in the live call can dial (800) 239-9838
from the U.S. International callers can dial (323) 794-2551. A telephone
replay will be available approximately two hours after the call
concludes and will be available through Monday, June 25, 2018, by
dialing (844) 512-2921 from the U.S., or (412) 317-6671 from
international locations; passcode is 5952733.
About Limoneira Company
Limoneira Company, a 125-year-old international agribusiness
headquartered in Santa Paula, California, has grown to become one of the
premier integrated agribusinesses in the world. Limoneira (pronounced lç
mon´âra) is a dedicated sustainability company with 11,200 acres of rich
agricultural lands, real estate properties, and water rights
in California, Arizona and Chile. The Company is a leading producer of
lemons, avocados, oranges, specialty citrus and other crops that are
enjoyed throughout the world. For more about Limoneira Company, visit www.limoneira.com.
Forward-Looking Statements
This press release contains forward-looking statements, including
earnings guidance for fiscal year 2018, within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.These
forward-looking statements are based on Limoneira's current expectations
about future events and can be identified by terms such as "expect,"
"may," "anticipate," "intend," "should be," "will be," "is likely to,"
"strive to," and similar expressions referring to future periods.
Limoneira believes the expectations reflected in the forward-looking
statements are reasonable but cannot guarantee future results, level of
activity, performance or achievements.Actual results may differ
materially from those expressed or implied in the forward-looking
statements.Therefore, Limoneira cautions you against relying on
any of these forward-looking statements. Factors which may cause future
outcomes to differ materially from those foreseen in forward-looking
statements include, but are not limited to:changes in laws,
regulations, rules, quotas, tariffs and import laws; weather conditions
that affect production, transportation, storage, import and export of
fresh product; increased pressure from crop disease, insects and other
pests; disruption of water supplies or changes in water allocations;
pricing and supply of raw materials and products; market responses to
industry volume pressures; pricing and supply of energy; changes in
interest and currency exchange rates; availability of financing for land
development activities; political changes and economic crises;
international conflict; acts of terrorism; labor disruptions, strikes or
work stoppages; loss of important intellectual property rights;
inability to pay debt obligations; inability to engage in certain
transactions due to restrictive covenants in debt instruments;
government restrictions on land use; and market and pricing risks due to
concentrated ownership of stock.Other risks and uncertainties
include those that are described in Limoneira'sSEC filings which are
available on the SEC's website at http://www.sec.gov.Limoneira undertakes no obligation to subsequently update or revise
the forward-looking statements made in this press release, except as
required by law.
Non-GAAP Financial Measures
Due to significant depreciable assets associated with the nature of our
operations and interest costs associated with our capital structure,
management believes that earnings before interest, income taxes,
depreciation and amortization (“EBITDA”) and adjusted EBITDA, which
excludes impairments on real estate development assets when applicable,
is an important measure to evaluate our Company’s results of operations
between periods on a more comparable basis. Such measures are widely
used by analysts, investors and lenders as well as by management in
assessing our Company’s financial performance and business trends
relating to our results of operations and financial condition. These
measurements are not prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”) and should not be construed as an
alternative to reported results determined in accordance with GAAP. The
non-GAAP information provided is unique to our Company and may not be
consistent with methodologies used by other companies. With respect to
our expectations under "Reiterating Fiscal Year 2018 Outlook" above, the
Company has not provided a reconciliation of forward-looking non-GAAP
measures, primarily due to variability and difficulty in making accurate
forecasts and projections, as not all of the information necessary for a
quantitative reconciliation is available to the Company without
unreasonable efforts.
EBITDA is summarized and reconciled to net income attributable to
Limoneira Company which management considers to be the most directly
comparable financial measure calculated and presented in accordance with
GAAP as follows (in thousands):
|
|
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
Six Months Ended
April 30,
|
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net income attributable to Limoneira Company
|
|
|
$
|
6,599
|
|
|
$
|
3,540
|
|
|
$
|
15,224
|
|
|
$
|
1,468
|
|
Interest expense, net
|
|
|
284
|
|
|
417
|
|
|
794
|
|
|
851
|
|
Income tax provision (benefit)
|
|
|
2,380
|
|
|
2,158
|
|
|
(8,207
|
)
|
|
918
|
|
Depreciation and amortization
|
|
|
1,744
|
|
|
1,614
|
|
|
3,434
|
|
—
|
|
3,191
|
|
EBITDA
|
|
|
$
|
11,007
|
|
|
$
|
7,729
|
|
|
$
|
11,245
|
|
|
$
|
6,428
|
|
Impairments of real estate development assets
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
120
|
|
Adjusted EBITDA
|
|
|
$
|
11,007
|
|
|
$
|
7,849
|
|
|
$
|
11,245
|
|
|
$
|
6,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIMONEIRA COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($ in thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
April 30,
2018 |
|
October 31,
2017 |
| Assets |
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
|
$
|
493
|
|
|
$
|
492
|
|
Accounts receivable, net
|
|
|
17,239
|
|
|
10,953
|
|
Cultural costs
|
|
|
2,021
|
|
|
4,124
|
|
Prepaid expenses and other current assets
|
|
|
6,560
|
|
|
6,981
|
|
Income taxes receivable
|
|
|
570
|
|
|
570
|
|
Total current assets
|
|
|
26,883
|
|
|
23,120
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
190,029
|
|
|
188,225
|
|
Real estate development
|
|
|
93,098
|
|
|
81,082
|
|
Equity in investments
|
|
|
18,280
|
|
|
14,061
|
|
Investment in Calavo Growers, Inc.
|
|
|
28,110
|
|
|
22,110
|
|
Other assets
|
|
|
10,753
|
|
|
10,433
|
|
Total Assets
|
|
|
$
|
367,153
|
|
|
$
|
339,031
|
|
|
|
|
|
|
| Liabilities and stockholders’ equity |
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
5,679
|
|
|
$
|
6,311
|
|
Growers payable
|
|
|
12,324
|
|
|
8,828
|
|
Accrued liabilities
|
|
|
6,250
|
|
|
5,177
|
|
Fair value of derivative instrument
|
|
|
40
|
|
|
268
|
|
Current portion of long-term debt
|
|
|
3,194
|
|
|
3,030
|
|
Total current liabilities
|
|
|
27,487
|
|
|
23,614
|
|
Long-term liabilities:
|
|
|
|
|
|
|
Long-term debt, less current portion
|
|
|
107,684
|
|
|
102,083
|
|
Deferred income taxes
|
|
|
22,555
|
|
|
31,415
|
|
Other long-term liabilities
|
|
|
4,329
|
|
|
3,920
|
|
Sale-leaseback deferral
|
|
|
38,821
|
|
|
30,396
|
|
Total liabilities
|
|
|
200,876
|
|
|
191,428
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
—
|
|
|
—
|
|
Series B Convertible Preferred Stock – $100 par value (50,000 shares
authorized: 14,790 shares issued and outstanding at April 30, 2018
and October 31, 2017) (8.75% coupon rate)
|
|
|
1,479
|
|
|
1,479
|
Series B-2 Convertible Preferred Stock – $100 par value (10,000
shares authorized: 9,300 shares
issued and outstanding at April
30, 2018 and October 31, 2017) (4% dividend rate on liquidation
value of $1,000 per share)
|
|
|
9,331
|
|
|
9,331
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
Series A Junior Participating Preferred Stock – $.01 par value
(20,000 shares authorized: zero issued or outstanding at April 30,
2018 and October 31, 2017)
|
|
|
—
|
|
|
—
|
|
Common Stock – $.01 par value (39,000,000 shares authorized:
14,532,952 and 14,405,031 shares issued and outstanding at April 30,
2018 and October 31, 2017, respectively)
|
|
|
145
|
|
|
144
|
|
Additional paid-in capital
|
|
|
94,831
|
|
|
94,294
|
|
Retained earnings
|
|
|
47,849
|
|
|
34,692
|
|
Accumulated other comprehensive income
|
|
|
12,019
|
|
|
7,076
|
|
Noncontrolling interest
|
|
|
623
|
|
|
587
|
|
Total stockholders’ equity
|
|
|
155,467
|
|
|
136,793
|
|
Total Liabilities and Stockholders’ Equity
|
|
|
$
|
367,153
|
|
|
$
|
339,031
|
|
|
|
|
|
|
|
|
|
|
|
|
LIMONEIRA COMPANY
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
($ in thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
April 30,
|
|
Six Months Ended
April 30,
|
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
Agribusiness
|
|
|
$
|
41,865
|
|
|
$
|
35,417
|
|
|
$
|
72,198
|
|
|
$
|
62,186
|
|
|
Rental operations
|
|
|
1,270
|
|
|
1,476
|
|
|
2,530
|
|
|
2,799
|
|
|
Real estate development
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total net revenues
|
|
|
43,135
|
|
|
36,893
|
|
|
74,728
|
|
|
64,985
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Agribusiness
|
|
|
28,798
|
|
|
26,455
|
|
|
56,960
|
|
|
52,799
|
|
|
Rental operations
|
|
|
976
|
|
|
950
|
|
|
2,041
|
|
|
2,005
|
|
|
Real estate development
|
|
|
39
|
|
|
40
|
|
|
69
|
|
|
125
|
|
|
Impairments of real estate development assets
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
120
|
|
|
Selling, general and administrative
|
|
|
3,942
|
|
|
3,116
|
|
|
8,016
|
|
|
6,963
|
|
|
Total costs and expenses
|
|
|
33,755
|
|
|
30,681
|
|
|
67,086
|
|
|
62,012
|
|
|
Operating income
|
|
|
9,380
|
|
|
6,212
|
|
|
7,642
|
|
|
2,973
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(284
|
)
|
|
(417
|
)
|
|
(794
|
)
|
|
(851
|
)
|
|
Equity in earnings of investments
|
|
|
(126
|
)
|
|
(141
|
)
|
|
(83
|
)
|
|
(67
|
)
|
|
Other income, net
|
|
|
16
|
|
|
40
|
|
|
257
|
|
|
327
|
|
|
Total other expense
|
|
|
(394
|
)
|
|
(518
|
)
|
|
(620
|
)
|
|
(591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax (provision) benefit
|
|
|
8,986
|
|
|
5,694
|
|
|
7,022
|
|
|
2,382
|
|
|
Income tax (provision) benefit
|
|
|
(2,380
|
)
|
|
(2,158
|
)
|
|
8,207
|
|
|
(918
|
)
|
|
Net income
|
|
|
6,606
|
|
|
3,536
|
|
|
15,229
|
|
|
1,464
|
|
|
Net (income) loss attributable to noncontrolling interest
|
|
|
(7
|
)
|
|
4
|
|
|
(5
|
)
|
|
4
|
|
|
Net income attributable to Limoneira Company
|
|
|
6,599
|
|
|
3,540
|
|
|
15,224
|
|
|
1,468
|
|
|
Preferred dividends
|
|
|
(126
|
)
|
|
(155
|
)
|
|
(251
|
)
|
|
(310
|
)
|
|
Net income attributable to common stock
|
|
|
$
|
6,473
|
|
|
$
|
3,385
|
|
|
$
|
14,973
|
|
|
$
|
1,158
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
|
$
|
0.45
|
|
|
$
|
0.24
|
|
|
$
|
1.04
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common share
|
|
|
$
|
0.44
|
|
|
$
|
0.24
|
|
|
$
|
1.02
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per common share
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding-basic
|
|
|
14,379,000
|
|
|
14,269,000
|
|
|
14,341,000
|
|
|
14,236,000
|
|
|
Weighted-average common shares outstanding-diluted
|
|
|
15,023,000
|
|
|
14,719,000
|
|
|
14,986,000
|
|
|
14,236,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180611005900/en/
Source: Limoneira Company
Investor Contact:
ICR
John Mills, 646-277-1254
Managing
Partner
