SEC Filing - Limoneira Company

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lmnr-20220430

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 APRIL 30, 2022


☐			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 May 31, 2022, there were 17,721,551 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 – April 30, 2022 and October 31, 2021		4

Consolidated Statements of Operations – three and six months ended April 30, 2022 and 2021		5

Consolidated Statements of Comprehensive Income (Loss) – three and six months ended April 30, 2022 and 2021		6

Consolidated Statements of Stockholders' Equity and Temporary Equity – three and six months ended April 30, 2022 and 2021		7

Consolidated Statements of Cash Flows – six months ended April 30, 2022 and 2021		8

Notes to Consolidated Financial Statements		10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43

Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION		44

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5.	Other Information	44

Item 6.	Exhibits	45

SIGNATURES		47

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 in this quarterly report include:

•negative impacts related to the COVID-19 pandemic and the effectiveness of our 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, winds 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;

•disruption in the global supply chain;

•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, 2021 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 pandemic. 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, 2021. 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)


	April 30, 2022		October 31, 2021
Assets
Current assets:
Cash	$	960	$	439
Accounts receivable, net	22,139		17,483
Cultural costs	2,858		7,500
Prepaid expenses and other current assets	10,648		10,709
Receivables/other from related parties	5,347		5,958

Total current assets	41,952		42,089

Property, plant and equipment, net	239,594		242,420
Real estate development	23,049		22,828
Equity in investments	64,290		64,072
Goodwill	1,520		1,527
Intangible assets, net	7,873		8,329
Other assets	12,466		11,011
Total assets	$	390,744	$	392,276

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	9,800	$	8,963
Growers and suppliers payable	9,495		10,371
Accrued liabilities	6,802		6,542
Payables to related parties	8,035		6,976
Current portion of long-term debt	3,678		2,472
Total current liabilities	37,810		35,324
Long-term liabilities:
Long-term debt, less current portion	135,575		130,353
Deferred income taxes	20,975		22,853
Other long-term liabilities	5,598		4,501
Total liabilities	199,958		193,031
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 April 30, 2022 and October 31, 2021) (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 April 30, 2022 and October 31, 2021) (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 April 30, 2022 and October 31, 2021)	—		—
Common Stock – $0.01 par value (39,000,000 shares authorized: 17,972,528 and 17,936,377 shares issued and 17,721,551 and 17,685,400 shares outstanding at April 30, 2022 and October 31, 2021, respectively)	180		179
Additional paid-in capital	164,253		163,965
Retained earnings	13,691		21,552
Accumulated other comprehensive loss	(6,539)		(5,733)
Treasury stock, at cost, 250,977 shares at April 30, 2022 and October 31, 2021	(3,493)		(3,493)
Noncontrolling interest	11,884		11,965
Total stockholders' equity	179,976		188,435
Total liabilities and stockholders' equity	$	390,744	$	392,276

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 April 30,				Six Months Ended April 30,
	2022		2021		2022		2021
Net revenues:
Agribusiness	$	45,369	$	43,989	$	83,452	$	81,126
Other operations	1,381		1,143		2,572		2,281

Total net revenues	46,750		45,132		86,024		83,407
Costs and expenses:
Agribusiness	37,599		36,442		78,843		73,380
Other operations	1,093		1,090		2,167		2,172

Loss on disposal of assets, net	346		—		261		—
Selling, general and administrative	5,126		5,216		11,725		11,111
Total costs and expenses	44,164		42,748		92,996		86,663
Operating income (loss)	2,586		2,384		(6,972)		(3,256)
Other (expense) income:
Interest income	27		25		48		68
Interest expense, net of patronage dividends	(696)		(622)		(481)		(488)
Equity in earnings of investments, net	299		643		350		1,009


Other income, net	78		57		93		51
Total other (expense) income	(292)		103		10		640

Income (loss) before income tax (expense) benefit	2,294		2,487		(6,962)		(2,616)
Income tax (expense) benefit	(722)		(974)		1,928		213
Net income (loss)	1,572		1,513		(5,034)		(2,403)
Net (income) loss attributable to noncontrolling interest	(11)		420		77		128
Net income (loss) attributable to Limoneira Company	1,561		1,933		(4,957)		(2,275)
Preferred dividends	(126)		(126)		(251)		(251)
Net income (loss) attributable to common stock	$	1,435	$	1,807	$	(5,208)	$	(2,526)

Basic net income (loss) per common share	$	0.08	$	0.10	$	(0.30)	$	(0.15)

Diluted net income (loss) per common share	$	0.08	$	0.10	$	(0.30)	$	(0.15)

Weighted-average common shares outstanding-basic	17,511,000		17,461,000		17,461,000		17,429,000
Weighted-average common shares outstanding-diluted	17,511,000		17,461,000		17,461,000		17,429,000

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 April 30,				Six Months Ended April 30,
	2022		2021		2022		2021
Net income (loss)	$	1,572	$	1,513	$	(5,034)	$	(2,403)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(1,006)		577		(951)		1,372
Minimum pension liability adjustment, net of tax of $27, $50, $54 and $100 for the three and six months ended April 30, 2022 and 2021, respectively.	73		134		145		268


Total other comprehensive (loss) income, net of tax	(933)		711		(806)		1,640
Comprehensive income (loss)	639		2,224		(5,840)		(763)
Comprehensive (income) loss attributable to noncontrolling interest	(5)		403		81		72
Comprehensive income (loss) attributable to Limoneira Company	$	634	$	2,627	$	(5,759)	$	(691)

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		Stock		Interest		Equity		Stock		Stock
Balance at October 31, 2021	17,685,400	$	179	$	163,965	$	21,552	$	(5,733)	$	(3,493)	$	11,965	$	188,435	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,328)		—		—		—		(1,328)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	70,000	1		996		—		—		—		—		997		—		—
Exchange of common stock	(55,362)	—		(900)		—		—		—		—		(900)		—		—


Net loss	—	—		—		(6,518)		—		—		(88)		(6,606)		—		—
Other comprehensive income, net of tax	—	—		—		—		127		—		2		129		—		—
Balance at January 31, 2022	17,700,038	$	180	$	164,061	$	13,581	$	(5,606)	$	(3,493)	$	11,879	$	180,602	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,325)		—		—		—		(1,325)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(33)		—		—		—		(33)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	34,231	—		378		—		—		—		—		378		—		—
Exchange of common stock	(12,718)	—		(186)		—		—		—		—		(186)		—		—

Net income	—	—		—		1,561		—		—		11		1,572		—		—
Other comprehensive loss, net of tax	—	—		—		—		(933)		—		(6)		(939)		—		—
Balance at April 30, 2022	17,721,551	$	180	$	164,253	$	13,691	$	(6,539)	$	(3,493)	$	11,884	$	179,976	$	1,479	$	9,331


	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, 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

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

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	Six Months Ended April 30,
	2022		2021
Operating activities
Net loss	$	(5,034)	$	(2,403)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	4,963		5,053

Loss (gain) on disposal of assets, net	261		(16)

Stock compensation expense	1,375		1,637
Non-cash lease expense	207		237
Equity in earnings of investments, net	(350)		(1,009)
Cash distributions from equity investments	132		—
Deferred income taxes	(1,928)		(213)


Other, net	360		274
Changes in operating assets and liabilities:
Accounts receivable and receivables/other from related parties	(3,877)		(6,733)
Cultural costs	4,640		2,724
Prepaid expenses and other current assets	(2,392)		(1,158)
Income taxes receivable	—		4,966
Other assets	33		—
Accounts payable and growers and suppliers payable	(413)		2,738
Accrued liabilities and payables to related parties	1,030		(1,197)
Other long-term liabilities	(167)		(257)
Net cash (used in) provided by operating activities	(1,160)		4,643
Investing activities
Capital expenditures	(4,123)		(5,409)

Net proceeds from sale of assets	1,121		83






Collection on note receivable	2,600		25


Investments in mutual water companies and water rights	(40)		(200)

Net cash used in investing activities	(442)		(5,501)
Financing activities
Borrowings of long-term debt	75,247		48,185
Repayments of long-term debt	(68,762)		(42,675)
Principal paid on finance leases	(169)		—
Dividends paid – common	(2,653)		(2,651)
Dividends paid – preferred	(251)		(251)
Exchange of common stock	(1,086)		(700)



Net cash provided by financing activities	2,326		1,908
Effect of exchange rate changes on cash	(203)		39
Net increase in cash	521		1,089
Cash at beginning of period	439		501
Cash at end of period	$	960	1,590

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

(In thousands)


	Six Months Ended April 30,
	2022		2021
Supplemental disclosures of cash flow information
Cash paid during the period for interest, net of amounts capitalized	$	431	$	780
Cash paid (received) during the period for income taxes, net	$	—	$	(4,997)
Non-cash investing and financing activities:






Capital expenditures accrued but not paid at period-end	$	88	$	150

Accrued contribution obligation of investment in water company	$	450	$	450

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

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Basis of Presentation

Business

Limoneira Company (together with its consolidated subsidiaries, the “Company”) engages primarily in growing citrus and avocados, picking and hauling citrus, and packing, marketing and selling citrus. The Company is also engaged in residential rentals and other rental operations and real estate development activities.

The Company markets and sells citrus directly to food service, wholesale and retail customers throughout the United States, Canada, Asia, Europe and other international markets. The Company is a member of Sunkist Growers, Inc. (“Sunkist”), an agricultural marketing cooperative, and sells a portion of its oranges, specialty citrus and other crops to Sunkist-licensed and other third-party packinghouses.

Through fiscal year 2021, the Company sold the majority of its avocado production to Calavo Growers, Inc. (“Calavo”), a packing and marketing company listed on the NASDAQ Global Select Market under the symbol CVGW. In February 2022, the Company terminated its Avocado Marketing Agreement and the associated Letter Agreement Regarding Fruit Commitment with Calavo to pursue opportunities with other packing and marketing companies.

Basis of Presentation and Preparation

The accompanying unaudited interim consolidated financial statements include the accounts of the Company and the accounts of all the subsidiaries and investments in which the Company holds a controlling interest. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company, the unaudited interim consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these unaudited interim consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. Because the consolidated financial statements do not include all of the information and notes required by GAAP for a complete set of consolidated financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K.

2. Summary of Significant Accounting Policies

Comprehensive Income (Loss)

Comprehensive income (loss) represents all changes in a company’s net assets, except changes resulting from transactions with stockholders. Other comprehensive income or loss primarily includes foreign currency translation items and defined benefit pension items. Accumulated other comprehensive loss is reported as a component of the Company's stockholders' equity.

The following table summarizes other comprehensive (loss) income by component (in thousands):


	Three Months Ended April 30,
	2022						2021
	Pre-tax Amount		Tax Expense		Net Amount		Pre-tax Amount		Tax Expense		Net Amount
Foreign currency translation adjustments	$	(1,006)	$	—	$	(1,006)	$	577	$	—	$	577
Minimum pension liability adjustments:
Other comprehensive gain before reclassifications	100		(27)		73		184		(50)		134


Other comprehensive (loss) income	$	(906)	$	(27)	$	(933)	$	761	$	(50)	$	711

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

2. Summary of Significant Accounting Policies (continued)

Comprehensive Income (Loss) (continued)

Six Months Ended April 30,

2022

2021