Limoneira Company Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Citrus: Merging citrus sales and marketing with Sunkist starting in first quarter of fiscal year 2026. This will improve supply chain efficiency, reduce costs by ~$5 million annually, save ~$5 million in selling and marketing expenses, and enhance EBITDA by ~$5 million. Sales and marketing staff will transfer to Sunkist, and access to better food service and retail customers will be gained. Brokerage business will transition to Sunkist, but it will enhance operational capabilities and cost structure.
• Avocado: Avocado business unchanged; ongoing planting regime as one of the largest growers in US. Expanding avocado production by 2,000 acres by end of fiscal year 2027 to capitalize on consumer demand.
• Real estate: Harvest at Limoneira has strong home sales velocity with robust activity that could accelerate Phase 3.
• Water monetization: 2 transactions expected to close in 2025. Also focused on divestiture of farming assets in Chile and Windfall Farms vineyard in Paso Robles.

Segment Performance

• Agribusiness: Total net revenue for agribusiness in second quarter of fiscal year 2025 was $33.6 million, down from $43.3 million in the same period last year. Fresh packed lemon sales were $19.7 million in 2025 vs $25.8 million in 2024. Brokered lemons and other lemon sales were $2.4 million in 2025 vs $3.8 million in 2024. Orange revenue was $1.6 million in 2025 vs $1.2 million in 2024. Specialty citrus and wine grape revenue was $671,000 in 2025 vs $839,000 in 2024. Farm management revenues were $339,000 in 2025 vs $2 million in 2024.
• Avocado: Avocado revenue was $2.8 million in second quarter of fiscal year 2025, up from $2.3 million in 2024. Approximately 1.2 million pounds of avocados were sold at an average price of $2.26 per pound in 2025 vs ~1.6 million pounds at $1.47 per pound in 2024.
• Other operations: Other operations revenue was $1.5 million in 2025 vs $1.3 million in 2024.

Guidance

• Fiscal year 2025: Fresh lemon volumes expected to be in range of 4.5 million to 5 million cartons (down from prior 5 million to 5.5 million cartons). Avocado volumes expected to be in range of 7 million to 8 million pounds (lower than 2024 due to alternate bearing of avocado trees).
• Beyond fiscal year 2025: Expect $155 million from Harvest and East Area II over next 6 fiscal years. Expand avocado production by 2,000 acres by end of fiscal year 2027. Partnership with Sunkist will bring $5 million annual cost savings starting next year. Fiscal year 2026 estimate for lemon cartons is 4 million to 4.5 million.

Risks

• Market volatility in citrus, which has caused pricing pressure. Alternate bearing in avocado trees affecting volume. Uncertainties in asset monetization. Competitive pressures in the lemon market impacting pricing and revenue.

Q: Congratulations on the Sunkist deal. Can you elaborate on brokered fruit revenue and the deal structure?

A: The brokered fruit business revenue will decrease as the brokerage business transitions to Sunkist. The deal structure involves leveraging Sunkist's supply chain capacities for wash and storage, transitioning sales and marketing staff to Sunkist (reducing costs), and eliminating lease requirements for Oxnard facilities. Packing margins for own and grower partner fruit will be strengthened.

Q: What is the balance sheet impact of the Sunkist transaction?

A: Accounts receivable and credit will go over to the Sunkist system. The main effect is on cost perspective and logistics, with a fixed charge per carton for own grown cartons.

Q: Talk about the avocado harvest delay and future plantings.

A: The avocado harvest was postponed to capture better pricing. Weather has been cooperative, allowing for larger fruit size. Early plantings are showing good yield, with a 3-year-old tree yielding over 10,000 pounds per acre, and expecting to expand avocado production by 2,000 acres by 2027 to enhance EBITDA.