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Jul 31, 2023
Limoneira Q3 2023 Earnings Report
Reported financial results for the third quarter ended July 31, 2023.
Key Takeaways
Limoneira Company reported a decrease in total net revenue to $52.5 million compared to $58.9 million in the third quarter of the previous fiscal year. The company's results were impacted by lower lemon pricing and lower fresh utilization rates due to heavy rains in California. However, the company's strategic shift towards an "asset-lighter" business model is evident in the growth of brokered lemons and other lemon sales, as well as farm management revenue.
Brokered lemons and other lemon sales grew 76% year-over-year to $8.8 million.
Farm management revenue reached $5.4 million.
The company expects to receive approximately $1.3 million annually from a water fallowing conservation program in Yuma, Arizona.
Lemon pricing has been steadily increasing since the beginning of August, positioning the company well for expected higher lemon pricing in fiscal year 2024.
Limoneira
Limoneira
Forward Guidance
The Company now expects fresh lemon volumes to be in the range of 4.7 million to 5.0 million cartons for fiscal year 2023, compared to previous guidance of 5.0 million to 5.4 million cartons. The Company achieved avocado volume of approximately 3.8 million pounds in fiscal year 2023 compared to previous guidance of 3.0 million to 4.0 million pounds.
Positive Outlook
- Company anticipates year-over-year pricing improvement in fresh lemons in fourth quarter of fiscal year 2023.
- Company Successfully Capitalized on Water Fallowing Conservation Program in Yuma, Arizona; Expects to Receive Approximately $1.3 Million Annually from the Program
- The Company has 700 acres of non-bearing lemons and avocados estimated to become full bearing over the next four to five years, which the Company expects will enable strong organic growth in the coming years.
- The Company also expects to have a steady increase in third-party grower fruit.
- Company expects to receive total proceeds of $115 million from Harvest at Limoneira, LLCB II and East Area II spread out over seven fiscal years, with approximately $8 million received in fiscal year 2022.
Challenges Ahead
- Company’s food service business and industry logistics continue to experience slowdown due to supply chain and inflationary pressures on a global basis.
- Our third quarter results were impacted by lower lemon pricing and lower fresh utilization rates as a result of the heavy rains in California throughout December until May, which delayed a portion of our lemon harvest by two months and led to an industry-wide pest issue that lowered the grade on certain fruit.
- As a result, lemon pricing remained pressured throughout the quarter.
- The Company now expects fresh lemon volumes to be in the range of 4.7 million to 5.0 million cartons for fiscal year 2023, compared to previous guidance of 5.0 million to 5.4 million cartons.
- The decline in volume was primarily due to the sale of the Northern Properties in the first quarter of fiscal year 2023.