SEC Filing - Limoneira Company

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lmnr-20200731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JULY 31, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-34755


LIMONEIRA COMPANY
(Exact name of Registrant as Specified in its Charter)


Delaware			77-0260692
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)


1141 Cummings Road, Santa Paula, CA			93060
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s telephone number, including area code: (805) 525-5541

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol (s)	Name of Each Exchange of Which Registered
Common Stock, $0.01 par value	LMNR	The NASDAQ Stock Market LLC (NASDAQ Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

☐

Large accelerated filer

☒

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of August 31, 2020, there were 17,815,607 shares outstanding of the registrant’s common stock.

LIMONEIRA COMPANY

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			4

Item 1.	Financial Statements	4

Consolidated Balance Sheets – July 31, 2020 and October 31, 2019			4

Consolidated Statements of Operations – three and nine months ended July 31, 2020 and 2019			5

Consolidated Statements of Comprehensive Income (Loss) – three and nine months ended July 31, 2020 and 2019			6

Consolidated Statements of Stockholders' Equity and Temporary Equity – three and nine months ended July 31, 2020 and 2019			7

Consolidated Statements of Cash Flows – nine months ended July 31, 2020 and 2019			9

Notes to Consolidated Financial Statements			11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51

Item 4.	Controls and Procedures	51

PART II. OTHER INFORMATION			52

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	54

SIGNATURES			56

Cautionary Note on Forward-Looking Statements.

This Quarterly Report on Form 10-Q contains both historical and forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond the Company’s control. The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied include:

•changes in laws, regulations, rules, quotas, tariffs, and import laws;

•adverse weather conditions, natural disasters and other adverse natural conditions, including freezes, rains, fires and droughts that affect the production, transportation, storage, import and export of fresh produce;

•market responses to industry volume pressures;

•increased pressure from disease, insects and other pests;

•disruption of water supplies or changes in water allocations;

•product and raw materials supplies and pricing;

•energy supply and pricing;

•changes in interest rates;

•availability of financing for development activities;

•general economic conditions for residential and commercial real estate development;

•political changes and economic crises;

•international conflict;

•acts of terrorism;

•labor disruptions, strikes, shortages or work stoppages;

•the impact of foreign exchange rate movements;

•negative impacts related to the COVID-19 pandemic and the effectiveness of the Company's responses to the pandemic;

•ability to maintain compliance with covenants under our loan agreements;

•loss of important intellectual property rights; and

•other factors disclosed in our public filings with the Securities and Exchange Commission (the "SEC").

These forward-looking statements involve risks and uncertainties that we have identified as having the potential to cause actual results to differ materially from those contemplated herein. We have described in Part II, Item 1A-“Risk Factors” additional factors that could cause our actual results to differ from our projections or estimates, especially relating to the COVID-19 pandemic.

Many of these risks and uncertainties are currently amplified by, and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks.

The Company’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which the Company is not currently aware or which the Company currently deems immaterial could also cause the Company’s actual results to differ, including those discussed in the section entitled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

The terms the “Company,” “Limoneira," “we,” “our” and “us” as used throughout this Quarterly Report on Form 10-Q refer to Limoneira Company and its consolidated subsidiaries, unless otherwise indicated.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LIMONEIRA COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($ in thousands, except share amounts)


	July 31, 2020		October 31, 2019
Assets
Current assets:
Cash	$	878	$	616
Accounts receivable, net	21,478		15,114
Cultural costs	6,090		7,223
Prepaid expenses and other current assets	18,309		8,153
Receivables/other from related parties	3,444		2,985
Income taxes receivable	5,827		979
Total current assets	56,026		35,070

Property, plant and equipment, net	242,501		248,114
Real estate development	20,142		17,602
Equity in investments	61,245		58,223
Investment in Calavo Growers, Inc.	—		17,346
Goodwill	1,538		1,839
Intangible assets, net	11,609		12,407
Other assets	8,837		9,266
Total assets	$	401,898	$	399,867

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	10,350	$	4,974
Growers payable	6,366		14,500
Accrued liabilities	6,171		8,261
Payables to related parties	5,235		906
Current portion of long-term debt	3,426		3,023
Total current liabilities	31,548		31,664
Long-term liabilities:
Long-term debt, less current portion	122,159		105,892
Deferred income taxes	23,765		24,346
Other long-term liabilities	6,064		5,467
Total liabilities	183,536		167,369
Commitments and contingencies (See Note 18)	—		—

Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at July 31, 2020 and October 31, 2019) (8.75% coupon rate)	1,479		1,479
Series B-2 Convertible Preferred Stock – $100.00 par value (10,000 shares authorized: 9,300 shares issued and outstanding at July 31, 2020 and October 31, 2019) (4% dividend rate on liquidation value of $1,000 per share)	9,331		9,331

Stockholders’ equity:
Series A Junior Participating Preferred Stock – $0.01 par value (20,000 shares authorized: zero issued or outstanding at July 31, 2020 and October 31, 2019)	—		—
Common Stock – $0.01 par value (39,000,000 shares authorized: 17,857,707 and 17,756,180 shares issued and 17,815,607 and 17,756,180 shares outstanding at July 31, 2020 and October 31, 2019, respectively)	179		178
Additional paid-in capital	161,655		160,254
Retained earnings	39,695		53,089
Accumulated other comprehensive loss	(7,261)		(7,255)
Treasury stock, at cost, 42,100 shares at July 31, 2020	(562)		—
Noncontrolling interest	13,846		15,422
Total stockholders’ equity	207,552		221,688
Total liabilities and stockholders’ equity	$	401,898	$	399,867

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

($ in thousands, except share amounts)


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
Net revenues:
Agribusiness	$	52,387	$	49,631	$	131,309	$	131,254
Other operations	1,172		1,238		3,477		3,668

Total net revenues	53,559		50,869		134,786		134,922
Costs and expenses:
Agribusiness	46,826		42,747		125,318		118,741
Other operations	1,010		1,043		3,396		3,269


Selling, general and administrative	3,909		4,961		15,557		14,819
Total costs and expenses	51,745		48,751		144,271		136,829
Operating income (loss)	1,814		2,118		(9,485)		(1,907)
Other income (expense):
Interest expense, net	(92)		(774)		(1,089)		(1,313)
Equity in earnings of investments, net	832		480		341		2,449
Loss on stock in Calavo Growers, Inc.	—		(1,775)		(6,299)		(2,073)

Other income, net	11		15		246		375
Total other income (expense)	751		(2,054)		(6,801)		(562)

Income (loss) before income tax (provision) benefit	2,565		64		(16,286)		(2,469)
Income tax (provision) benefit	(765)		(461)		5,876		216
Net income (loss)	1,800		(397)		(10,410)		(2,253)
Net loss (income) attributable to noncontrolling interest	509		(593)		1,409		(615)
Net income (loss) attributable to Limoneira Company	2,309		(990)		(9,001)		(2,868)
Preferred dividends	(125)		(125)		(376)		(376)
Net income (loss) attributable to common stock	$	2,184	$	(1,115)	$	(9,377)	$	(3,244)

Basic net income (loss) per common share	$	0.12	$	(0.06)	$	(0.54)	$	(0.19)

Diluted net income (loss) per common share	$	0.12	$	(0.06)	$	(0.54)	$	(0.19)

Weighted-average common shares outstanding-basic	17,623,000		17,554,000		17,607,000		17,527,000
Weighted-average common shares outstanding-diluted	18,497,000		17,554,000		17,607,000		17,527,000

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands)


	Three Months Ended July 31,						Nine Months Ended July 31,
	2020		2019		2020		2019
Net income (loss)	$	1,800	$	(397)	$	(10,410)	$	(2,253)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	1,410		(559)		(476)		(116)
Minimum pension liability adjustment, net of tax of $50, $28, $150 and $83 for the three and nine months ended July 31, 2020 and 2019, respectively.	135		72		330		218
Residual state tax effects on sale of equity securities	—		—		140		—

Total other comprehensive income (loss), net of tax	1,545		(487)		(6)		102
Comprehensive income (loss)	3,345		(884)		(10,416)		(2,151)
Comprehensive loss attributable to noncontrolling interest	544		575		1,431		576
Comprehensive income (loss) attributable to Limoneira Company	$	3,889	$	(309)	$	(8,985)	$	(1,575)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY

($ in thousands)


	Stockholders’ Equity																				Temporary Equity
	Common Stock					Additional Paid-In		Retained		Accumulated Other Comprehensive		Treasury		Non- controlling				Series B Preferred		Series B-2 Preferred
	Shares	Amount		Capital		Earnings		Income (Loss)		Stock		Interest		Total		Stock		Stock
Balance at October 31, 2019	17,756,180	$	178	$	160,254	$	53,089	$	(7,255)	$	—	$	15,422	$	221,688	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,338)		—		—		—		(1,338)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	112,841	1		828		—		—		—		—		829		—		—
Exchange of common stock	(11,314)	—		(213)		—		—		—		—		(213)		—		—


Net loss	—	—		—		(6,427)		—		—		(477)		(6,904)		—		—
Other comprehensive (loss) income, net of tax	—	—		—		—		(1,132)		—		12		(1,120)		—		—


Balance at January 31, 2020	17,857,707	$	179	$	160,869	$	45,199	$	(8,387)	$	—	$	14,957	$	212,817	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,341)		—		—		—		(1,341)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	—	—		358		—		—		—		—		358		—		—
Noncontrolling interest adjustment	—	—		—		—		—		—		(145)		(145)		—		—
Net loss	—	—		—		(4,883)		—		—		(423)		(5,306)		—		—
Other comprehensive (loss) income, net of tax	—	—		—		—		(419)		—		1		(418)		—		—
Balance at April 30, 2020	17,857,707	$	179	$	161,227	$	38,850	$	(8,806)	$	—	$	14,390	$	205,840	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,338)		—		—		—		(1,338)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(33)		—		—		—		(33)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	—	—		428		—		—		—		—		428		—		—



Treasury shares (42,100)	—	—		—		—		—		(562)		—		(562)		—		—
Net income (loss)	—	—		—		2,309		—		—		(509)		1,800		—		—
Other comprehensive income (loss), net of tax	—	—		—		—		1,545		—		(35)		1,510		—		—
Balance at July 31, 2020	17,857,707	$	179	$	161,655	$	39,695	$	(7,261)	$	(562)	$	13,846	$	207,552	$	1,479	$	9,331

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY (CONTINUED)

($ in thousands)


	Stockholders’ Equity																			Temporary Equity
	Common Stock					Additional Paid-In		Retained		Accumulated Other Comprehensive			Non- controlling				Series B Preferred		Series B-2 Preferred
	Shares	Amount		Capital		Earnings		Income (Loss)			Interest		Total		Stock		Stock
Balance at October 31, 2018	17,647,135	$	176	$	159,071	$	50,354	$	8,965		$	574	$	219,140	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,332)		—			—		(1,332)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—			—		(32)		—		—
Dividends Series B-2 $10 per share)	—	—