Limoneira Company Q4 FY2025 earnings call

• Transformed business model by addressing lemon oversupply, repositioning around multiple profit centers, and improving cost structure.
• Returned to Sunkist, expecting $10 million in cost savings in fiscal year 2026, with enhanced customer access to premium accounts and retailers.
• Expanded avocado offering with 1,500 acres planted, 700 acres to bear fruit in 3-4 years.
• Planned organic recycling joint venture with Agerman to process 300,000 tons of organic waste annually, generating $4 to $5 million in EBITDA from fiscal year 2027.
• Real estate projects like Harvest at Limoneira with expected $155 million in distributions over five years, and Limco Del Mar with potential residential development.
• Divested non-strategic assets, including Chilean assets sold for $15 million, and advancing monetization of other assets.
• Monetized water rights, realizing $1.7 million from Santa Paula Basin pumping water rights and poised for additional $50 to $70 million in value from Colorado River and Santa Paula Basin rights.

In fiscal year 2025, agribusiness revenue was $41.3 million, accounting for a significant portion. Within agribusiness, fresh packed lemon sales were $19.2 million, brokered lemons were $12.5 million, orange revenue was $2.9 million, and specialty citrus, wine grape, and other revenues were $2.9 million. Avocado revenue was $300,000 in 2025, with approximately 396,000 pounds of avocados sold at an average price of 79¢ per pound. Other operations revenue was $1.5 million in 2025.

• Fiscal year 2026 expected 50% reduction in SG&A, approximately $10 million in savings from operational restructuring.
• Fresh lemon volumes projected at 4 to 4.5 million cartons and avocado volumes at 5 to 6 million pounds in fiscal 2026.
• Real estate pipeline has $155 million in expected distributions over next five fiscal years.
• Planned Agerman organic recycling joint venture expected to contribute $4 to $5 million in EBITDA beginning in fiscal year 2027.

• Market volatility related to commodity pricing, especially for lemons.
• Operational challenges with avocado production cycles, including alternate bearing.
• Regulatory risks associated with water rights monetization and real estate entitlement processes.
• Uncertainties in achieving expected cost savings and revenue from strategic initiatives.

Q: Could you give more granularity on the $10 million cost savings from the Sunkist partnership and how customer relationships are enhanced?

A: The $10 million cost savings include $5 million from transitioning sales and marketing team to Sunkist and another $5 million from storage and operational efficiency. Returning to Sunkist provides better access to top retail customers, fixed pricing for periods, and access to major food service customers like Chick-fil-A.

Q: How do the Colorado River water rights renegotiations impact your strategy?

A: Class three Colorado River water rights are valuable as the Colorado River compact renegotiation may lead to higher payments for not using water, with cuts expected to be below class three, putting Limoneira in a favorable position.

Q: What's the outlook for lemon pricing near term and through the fiscal year?

A: Lemon pricing has seen fluctuations, with current price below $20. Contract-based pricing and balance of supply due to Southern Hemisphere fruit movements will influence near-term and fiscal year pricing, with expectations of better balance and higher prices if market conditions align.