SEC Filing - Limoneira Company

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lmnr-20230430

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, 2023


☐			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, 2023, there were 17,978,910 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, 2023 and October 31, 2022		4

Consolidated Statements of Operations – three and six months ended April 30, 2023 and 2022		5

Consolidated Statements of Comprehensive (Loss) Income – three and six months ended April 30, 2023 and 2022		6

Consolidated Statements of Stockholders' Equity and Temporary Equity – three and six months ended April 30, 2023 and 2022		7

Consolidated Statements of Cash Flows – six months ended April 30, 2023 and 2022		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	42

Item 4.	Controls and Procedures	42

PART II. OTHER INFORMATION		43

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosures	43

Item 5.	Other Information	43

Item 6.	Exhibits	44

SIGNATURES		46

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:

•success in executing the Company's business plans and strategies and managing the risks involved in the foregoing;

•negative impacts related to the COVID-19 pandemic and 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 and the impact of inflation;

•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, 2022 additional factors that could cause our actual results to differ from our projections or estimates.

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, 2022. 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, 2023		October 31, 2022
Assets
Current assets:
Cash	$	9,833	$	857
Accounts receivable, net	17,766		15,651
Cultural costs	2,744		8,643
Prepaid expenses and other current assets	11,749		8,496
Receivables/other from related parties	3,245		3,888

Total current assets	45,337		37,535
Property, plant and equipment, net	163,541		222,628
Real estate development	9,858		9,706
Equity in investments	73,445		72,855
Goodwill	1,529		1,506
Intangible assets, net	7,238		7,317
Other assets	15,378		16,971
Total assets	$	316,326	$	368,518
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	8,375	$	10,663
Growers and suppliers payable	8,109		10,740
Accrued liabilities	7,940		11,060
Payables to related parties	5,390		4,860
Income taxes payable	8,108		219
Current portion of long-term debt	446		1,732
Total current liabilities	38,368		39,274
Long-term liabilities:
Long-term debt, less current portion	40,837		104,076
Deferred income taxes	21,797		23,497
Other long-term liabilities	6,670		9,807
Total liabilities	107,672		176,654
Commitments and contingencies	—		—
Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at April 30, 2023 and October 31, 2022) (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, 2023 and October 31, 2022) (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, 2023 and October 31, 2022)	—		—
Common Stock – $0.01 par value (39,000,000 shares authorized: 18,229,887 and 17,935,292 shares issued and 17,978,910 and 17,684,315 shares outstanding at April 30, 2023 and October 31, 2022, respectively)	180		177
Additional paid-in capital	167,169		165,169
Retained earnings	26,582		15,500
Accumulated other comprehensive loss	(4,011)		(7,908)
Treasury stock, at cost, 250,977 shares at April 30, 2023 and October 31, 2022	(3,493)		(3,493)
Noncontrolling interest	11,417		11,609
Total stockholders' equity	197,844		181,054
Total liabilities and stockholders' equity	$	316,326	$	368,518

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,
	2023		2022		2023		2022
Net revenues:
Agribusiness	$	46,676	$	45,369	$	83,204	$	83,452
Other operations	1,394		1,381		2,767		2,572

Total net revenues	48,070		46,750		85,971		86,024
Costs and expenses:
Agribusiness	38,189		37,599		79,430		78,843
Other operations	1,009		1,093		2,247		2,167

Loss (gain) on disposal of assets, net	8,998		346		(30,744)		261
Gain on legal settlement	(2,269)		—		(2,269)		—
Selling, general and administrative	6,005		5,126		15,285		11,725
Total costs and expenses	51,932		44,164		63,949		92,996
Operating (loss) income	(3,862)		2,586		22,022		(6,972)
Other income (expense):
Interest income	62		27		70		48
Interest (expense), net of patronage dividends	996		(696)		(176)		(481)
Equity in earnings of investments, net	62		299		315		350
Other income (expense), net	200		78		(2,412)		93
Total other income (expense)	1,320		(292)		(2,203)		10
(Loss) income before income tax benefit (provision)	(2,542)		2,294		19,819		(6,962)
Income tax benefit (provision)	912		(722)		(5,915)		1,928
Net (loss) income	(1,630)		1,572		13,904		(5,034)
Net loss (income) attributable to noncontrolling interest	17		(11)		114		77
Net (loss) income attributable to Limoneira Company	(1,613)		1,561		14,018		(4,957)
Preferred dividends	(126)		(126)		(251)		(251)
Net (loss) income applicable to common stock	$	(1,739)	$	1,435	$	13,767	$	(5,208)

Basic net (loss) income per common share	$	(0.10)	$	0.08	$	0.77	$	(0.30)

Diluted net (loss) income per common share	$	(0.10)	$	0.08	$	0.75	$	(0.30)

Weighted-average common shares outstanding-basic	17,597,000		17,511,000		17,587,000		17,461,000
Weighted-average common shares outstanding-diluted	17,597,000		17,511,000		18,328,000		17,461,000

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

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(In thousands)



	Three Months Ended April 30,				Six Months Ended April 30,
	2023		2022		2023		2022
Net (loss) income	$	(1,630)	$	1,572	$	13,904	$	(5,034)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(50)		(1,006)		2,173		(951)
Minimum pension liability adjustments, net of tax of $0, $27, $(135) and $54 for the three and six months ended April 30, 2023 and 2022, respectively	—		73		(220)		145
Pension settlement cost, net of tax of $0 and $756 for the three and six months ended April 30, 2023	—		—		1,944		—

Total other comprehensive (loss) income, net of tax	(50)		(933)		3,897		(806)
Comprehensive (loss) income	(1,680)		639		17,801		(5,840)
Comprehensive loss (income) attributable to noncontrolling interest	17		(5)		114		81
Comprehensive (loss) income attributable to Limoneira Company	$	(1,663)	$	634	$	17,915	$	(5,759)

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

LIMONEIRA COMPANY

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

($ 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, 2022	17,684,315	$	177	$	165,169	$	15,500	$	(7,908)	$	(3,493)	$	11,609	$	181,054	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,337)		—		—		—		(1,337)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	146,289	1		1,063		—		—		—		—		1,064		—		—


Noncontrolling interest adjustment	—	—		—		—		—		—		(78)		(78)		—		—
Net income	—	—		—		15,631		—		—		(97)		15,534		—		—
Other comprehensive income, net of tax	—	—		—		—		3,947		—		—		3,947		—		—
Balance at January 31, 2023	17,830,604	$	178	$	166,232	$	29,669	$	(3,961)	$	(3,493)	$	11,434	$	200,059	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,348)		—		—		—		(1,348)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(33)		—		—		—		(33)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	149,900	2		963		—		—		—		—		965		—		—
Exchange of common stock	(1,594)	—		(26)		—		—		—		—		(26)		—		—

Net loss	—	—		—		(1,613)		—		—		(17)		(1,630)		—		—
Other comprehensive loss, net of tax	—	—		—		—		(50)		—		—		(50)		—		—
Balance at April 30, 2023	17,978,910	$	180	$	167,169	$	26,582	$	(4,011)	$	(3,493)	$	11,417	$	197,844	$	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) Income		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

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,
	2023		2022
Operating activities
Net income (loss)	$	13,904	$	(5,034)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	4,491		4,963

(Gain) loss on disposal of assets, net	(30,744)		261

Gain on legal settlement	(853)		—
Stock compensation expense	2,029		1,375
Non-cash lease expense	802		207
Equity in earnings of investments, net	(315)		(350)
Cash distributions from equity investments	—		132
Deferred income taxes	5,915		(1,928)


Other, net	162		360
Changes in operating assets and liabilities:
Accounts receivable and receivables/other from related parties	(1,583)		(3,877)
Cultural costs	2,051		4,640
Prepaid expenses and other current assets	(5,105)		(2,392)
Income taxes payable	(330)		—
Other assets	21		33
Accounts payable and growers and suppliers payable	(5,340)		(413)
Accrued liabilities and payables to related parties	(2,708)		1,030
Other long-term liabilities	(840)		(167)
Net cash used in operating activities	(18,443)		(1,160)

Investing activities
Capital expenditures	(5,417)		(4,123)

Net proceeds from sales of assets	98,506		1,121
Net proceeds from sale of real estate development assets	2,577		—


Cash distribution from Trapani Fresh	82		—

Collection on note receivable	—		2,600
Equity investment contributions	(275)		—

Investments in mutual water companies and water rights	(51)		(40)

Net cash provided by (used in) investing activities	95,422		(442)

Financing activities
Borrowings of long-term debt	57,940		75,247
Repayments of long-term debt	(122,775)		(68,762)

Principal paid on finance lease and equipment financings	(215)		(169)
Dividends paid – common	(2,685)		(2,653)
Dividends paid – preferred	(251)		(251)
Exchange of common stock	(26)		(1,086)



Net cash (used in) provided by financing activities	(68,012)		2,326

Effect of exchange rate changes on cash	9		(203)
Net increase in cash	8,976		521
Cash at beginning of period	857		439
Cash at end of period	$	9,833	$	960

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

(In thousands)



	Six Months Ended April 30,
	2023		2022
Supplemental disclosures of cash flow information
Cash paid during the period for interest (net of amounts capitalized)	$	397	$	431
Cash paid during the period for income taxes	$	330	$	—
Non-cash investing and financing activities:





Capital expenditures accrued but not paid at period-end	$	325	$	88

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.

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 (Loss) Income

Comprehensive (loss) income represents all changes in a company’s net assets, except changes resulting from transactions with stockholders. Other comprehensive income or loss 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,
	2023						2022
	Pre-tax Amount		Tax Expense		Net Amount		Pre-tax Amount		Tax Expense		Net Amount
Foreign currency translation adjustments	$	(50)	$	—	$	(50)	$	(1,006)	$	—	$	(1,006)
Minimum pension liability adjustments:
Other comprehensive income before reclassifications	—		—		—		100		(27)		73