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Jan 31, 2020
Calavo Growers Q1 2020 Earnings Report
Calavo Growers' first quarter 2020 results were announced, revealing record revenues but lower profits due to transitory factors.
Key Takeaways
Calavo Growers reported a 6% increase in revenue, reaching a record $273.3 million for the first quarter. However, gross profit decreased to $15.8 million from $30.8 million in the same period last year, and the company posted a net loss of $0.9 million, or $0.05 per diluted share.
Revenues rose to a record $273.3 million from $258.0 million.
Gross profit registered $15.8 million versus $30.8 million last year.
Net loss was $0.9 million, with an adjusted net income of $1.2 million.
Diluted loss per share was 5 cents, while adjusted diluted EPS was 7 cents.
Calavo Growers
Calavo Growers
Calavo Growers Revenue by Segment
Revenue by Segment
Fresh Revenue
CapyFin.com Forward Guidance
Calavo Growers anticipates double-digit growth in adjusted diluted earnings per share over the remaining nine months of the fiscal year.
Positive Outlook
- Estimates for this year’s all-source U.S. avocado supply are at least 10 percent above 2019, promising further volume gains in the Fresh segment.
- Sourcing from California and Peru is expected to come fully online during the summer, further boosting the Fresh segment.
- Profit-performance improvements are expected in company-controlled manufacturing plants within RFG.
- Sales growth is anticipated in company-controlled facilities, supplemented by the Simply Fresh Fruit business.
- Larger avocado supply and production efficiencies are expected to contribute to growth in gross profit and margin for Calavo Foods.
Challenges Ahead
- Turbulent industry conditions constrained results in the most recent period.
- The company encountered market conditions in which selling prices remained relatively flat for most of the quarter, but avocado fruit costs rose consistently across the quarter.
- Poor fruit quality across the industry, specifically an over-abundance of lower-quality, #2 grade fruit during the period, impacted Fresh segment gross profit.
- Lower sales in the Midwest due to issues with the company’s co-packer continued to hamper results.
- Pending plant closure of the Midwest co-packer is expected to cause a modest two to three percent decline in overall RFG segment sales for the year.