SEC Filing - Limoneira Company

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lmnr-20210731

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


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

FOR THE QUARTERLY PERIOD ENDED JULY 31, 2021


☐			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

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


Title of Each Class	Trading Symbol	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, 2021, there were 17,685,400 shares outstanding of the registrant’s common stock.

LIMONEIRA COMPANY

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		4

Item 1.	Financial Statements (Unaudited)	4

Consolidated Balance Sheets – July 31, 2021 and October 31, 2020		4

Consolidated Statements of Operations – three and nine months ended July 31, 2021 and 2020		5

Consolidated Statements of Comprehensive Income (Loss) – three and nine months ended July 31, 2021 and 2020		6

Consolidated Statements of Stockholders' Equity and Temporary Equity – three and nine months ended July 31, 2021 and 2020		7

Consolidated Statements of Cash Flows – nine months ended July 31, 2021 and 2020		9

Notes to Consolidated Financial Statements		11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4.	Controls and Procedures	46

PART II. OTHER INFORMATION		47

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	48

SIGNATURES		51

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:

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

•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;

•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 I, Item 1A-“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020 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 in our Annual Report on Form 10-K for the fiscal year ended October 31, 2020. 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.

All references to “we,” "us," “our,” “our Company,” "the Company" or "Limoneira" in this Quarterly Report on Form 10-Q mean Limoneira Company, a Delaware corporation, and its consolidated subsidiaries.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LIMONEIRA COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

($ in thousands, except share amounts)


	July 31, 2021		October 31, 2020
Assets
Current assets:
Cash	$	775	$	501
Accounts receivable, net	16,427		16,261
Cultural costs	5,426		6,865
Prepaid expenses and other current assets	10,219		10,688
Receivables/other from related parties	4,687		2,294
Income taxes receivable	—		5,911
Total current assets	37,534		42,520

Property, plant and equipment, net	244,900		242,649
Real estate development	22,251		21,636
Equity in investments	63,446		61,214
Goodwill	1,539		1,535
Intangible assets, net	8,680		11,309
Other assets	9,920		8,737
Total assets	$	388,270	$	389,600

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	8,336	$	5,838
Growers payable	10,328		8,126
Accrued liabilities	5,639		7,947
Payables to related parties	7,101		6,273
Current portion of long-term debt	2,236		3,277
Total current liabilities	33,640		31,461
Long-term liabilities:
Long-term debt, less current portion	120,935		122,571
Deferred income taxes	23,526		22,430
Other long-term liabilities	6,374		6,568
Total liabilities	184,475		183,030
Commitments and contingencies (See Note 16)	—		—

Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at July 31, 2021 and October 31, 2020) (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, 2021 and October 31, 2020) (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, 2021 and October 31, 2020)	—		—
Common Stock – $0.01 par value (39,000,000 shares authorized: 17,936,377 and 17,857,707 shares issued and 17,685,400 and 17,606,730 shares outstanding at July 31, 2021 and October 31, 2020, respectively)	179		179
Additional paid-in capital	163,460		162,084
Retained earnings	27,874		30,797
Accumulated other comprehensive loss	(6,815)		(7,548)
Treasury stock, at cost, 250,977 shares at July 31, 2021 and October 31, 2020	(3,493)		(3,493)
Noncontrolling interest	11,780		13,741
Total stockholders' equity	192,985		195,760
Total liabilities and stockholders' equity	$	388,270	$	389,600

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,
	2021		2020		2021		2020
Net revenues:
Agribusiness	$	47,954	$	52,387	$	129,080	$	131,309
Other operations	1,171		1,172		3,452		3,477

Total net revenues	49,125		53,559		132,532		134,786
Costs and expenses:
Agribusiness	40,691		46,826		114,071		125,318
Other operations	1,017		1,010		3,189		3,396


Selling, general and administrative	4,043		3,909		15,154		15,557
Total costs and expenses	45,751		51,745		132,414		144,271
Operating income (loss)	3,374		1,814		118		(9,485)
Other income (expense):
Interest income	211		—		279		—
Interest expense, net of patronage dividends	(574)		(92)		(1,062)		(1,089)
Equity in earnings of investments, net	1,462		832		2,471		341
Loss on stock in Calavo Growers, Inc.	—		—		—		(6,299)

Other income, net	32		11		83		246
Total other income (expense)	1,131		751		1,771		(6,801)

Income (loss) before income tax (provision) benefit	4,505		2,565		1,889		(16,286)
Income tax (provision) benefit	(1,335)		(765)		(1,122)		5,876
Net income (loss)	3,170		1,800		767		(10,410)
Net loss attributable to noncontrolling interest	535		509		663		1,409
Net income (loss) attributable to Limoneira Company	3,705		2,309		1,430		(9,001)
Preferred dividends	(125)		(125)		(376)		(376)
Net income (loss) attributable to common stock	$	3,580	$	2,184	$	1,054	$	(9,377)

Basic net income (loss) per common share	$	0.20	$	0.12	$	0.06	$	(0.54)

Diluted net income (loss) per common share	$	0.20	$	0.12	$	0.06	$	(0.54)

Weighted-average common shares outstanding-basic	17,461,000		17,623,000		17,439,000		17,607,000
Weighted-average common shares outstanding-diluted	18,243,000		18,497,000		17,439,000		17,607,000

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,
	2021		2020		2021		2020
Net income (loss)	$	3,170	$	1,800	$	767	$	(10,410)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(1,042)		1,410		330		(476)
Minimum pension liability adjustment, net of tax of $50, $50, $150 and $150 for the three and nine months ended July 31, 2021 and 2020, respectively.	135		135		403		330
Residual state tax effects on sale of equity securities	—		—		—		140

Total other comprehensive (loss) income, net of tax	(907)		1,545		733		(6)
Comprehensive income (loss)	2,263		3,345		1,500		(10,416)
Comprehensive loss attributable to noncontrolling interest	558		544		630		1,431
Comprehensive income (loss) attributable to Limoneira Company	$	2,821	$	3,889	$	2,130	$	(8,985)

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		Total		Series B Preferred		Series B-2 Preferred
	Shares	Amount		Capital		Earnings		(Loss) Income		Stock		Interest		Equity		Stock		Stock
Balance at October 31, 2020	17,606,730	$	179	$	162,084	$	30,797	$	(7,548)	$	(3,493)	$	13,741	$	195,760	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,324)		—		—		—		(1,324)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	125,190	1		1,066		—		—		—		—		1,067		—		—
Exchange of common stock	(46,993)	(1)		(700)		—		—		—		—		(701)		—		—


Net (loss) income	—	—		—		(4,208)		—		—		292		(3,916)		—		—
Other comprehensive income, net of tax	—	—		—		—		929		—		39		968		—		—


Balance at January 31, 2021	17,684,927	$	179	$	162,450	$	25,140	$	(6,619)	$	(3,493)	$	14,072	$	191,729	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,327)		—		—		—		(1,327)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(33)		—		—		—		(33)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	473	—		570		—		—		—		—		570		—		—


Net income (loss)	—	—		—		1,933		—		—		(420)		1,513		—		—
Other comprehensive income, net of tax	—	—		—		—		711		—		17		728		—		—
Balance at April 30, 2021	17,685,400	$	179	$	163,020	$	25,620	$	(5,908)	$	(3,493)	$	13,669	$	193,087	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,326)		—		—		—		(1,326)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	—	—		440		—		—		—		—		440		—		—


Noncontrolling interest adjustment	—	—		—		—		—		—		(1,331)		(1,331)		—		—

Net income (loss)	—	—		—		3,705		—		—		(535)		3,170		—		—
Other comprehensive loss, net of tax	—	—		—		—		(907)		—		(23)		(930)		—		—
Balance at July 31, 2021	17,685,400	$	179	$	163,460	$	27,874	$	(6,815)	$	(3,493)	$	11,780	$	192,985	$	1,479	$	9,331

LIMONEIRA COMPANY

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


	Stockholders' Equity													Temporary Equity
	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Treasury		Non- controlling		Total		Series B Preferred		Series B-2 Preferred
	Shares	Amount		Capital		Earnings		Loss		Stock		Interest		Equity		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 (loss) income	—	—		—		2,309		—		—		(509)		1,800		—		—
Other comprehensive loss, net of tax	—	—		—		—		1,545		—		(35)		1,510		—		—
Balance at July 31, 2020	17,815,607	$	179	$	161,655	$	39,695	$	(7,261)	$	(562)	$	13,846	$	207,552	$	1,479	$	9,331

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

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)


	Nine Months Ended July 31,
	2021		2020
Operating activities
Net income (loss)	$	767	$	(10,410)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	7,490		7,555

(Gain) or loss on disposals of assets	(20)		519

Stock compensation expense	2,077		1,615
Non-cash lease expense	346		349
Equity in earnings of investments, net	(2,471)		(341)

Deferred income taxes	1,122		(581)


Loss on stock in Calavo Growers, Inc.	—		6,299

Other, net