Calavo Growers, Inc. (Nasdaq-GS:
CVGW), a global avocado-industry leader and provider of
value-added fresh food, today reported its financial results for
the fourth quarter and fiscal year ended October 31, 2021.
Fourth Quarter Financial Overview
- Total revenue of $273.4 million, a 17% increase from the
year-ago quarter.
- Fresh segment revenue increased 26% year-over-year to $149.8
million, and Renaissance Food Group (RFG) and Foods segments
revenues increased 7% and 6% year-over-year, respectively.
- Gross profit of $9.1 million, or 3.3% of revenue, compared to
$21.2 million, or 9.0% of revenue, for the year-ago quarter.
- Net loss of $(13.0) million, or $(0.73) per share, compared to
net income of $6.2 million, or $0.35 per diluted share, for the
same period last year.
- Adjusted net loss was $(1.4) million, or $(0.08) per share,
compared to adjusted net income of $6.0 million, or $0.34 per
diluted share last year.
- Adjusted EBITDA of $1.4 million compared to $13.4 million for
the same period last year.
Adjusted net income (loss) and adjusted EBITDA are non-GAAP
financial measures. See “Non-GAAP Financial Measures” below.
Fiscal Year 2021 Financial Overview
- Total revenue of $1.1 billion, consistent with fiscal year
2020.
- Gross profit of $57.4 million, or 5.4% of revenue, compared to
$89.9 million, or 8.5% of revenue, for fiscal year 2020.
- Net loss of $(11.8) million, or $(0.67) per share, compared to
a net loss of $(13.6) million, or $(0.78) per share for fiscal year
2020.
- Adjusted net income of $6.2 million, or $0.35 per share,
compared to adjusted net income of $27.6 million, or $1.57 per
diluted share for fiscal year 2020.
- Adjusted EBITDA of $26.8 million, compared to $54.4 million for
fiscal year 2020.
Fourth Quarter and Fiscal Year Highlights
- Headway with Project Uno, a profit improvement project with
initial focus on pricing initiatives, SKU rationalization, plant
optimization and unified procurement, freight and back-office
activities across all business units.
- Continued strengthening supply chain and adjusting for the
prolonged COVID-19 pandemic.
- Appointed Mariela Matute to Chief Financial Officer role and
Graciela Montgomery as first Chief Human Resources Officer.
- Declared an annual cash dividend of $1.15 per share on common
stock, consistent with the prior year’s annual dividend.
- Published the third annual sustainability report and undertook
the first corporate carbon footprint measurement, providing a
baseline to measure progress on Calavo’s journey to net-zero.
Management Commentary “Early in the fourth
quarter, we saw a continuation of the challenging market conditions
we experienced in the third quarter including inflationary effects
on labor, raw materials and freight,” said Steve Hollister, Interim
CEO of Calavo Growers. “We also continued to experience challenges
with the avocado crop, including high fruit costs and less
desirable sizes. As we moved through the quarter, market conditions
improved, and we obtained price increases across customers and
product lines. As a result, we experienced steady monthly
improvement, and we finished the quarter delivering stronger
financial results than at the beginning of the quarter.
“As part of Project Uno, we made the difficult decision to
discontinue food processing operations at our RFG facility in Green
Cove Springs (near Jacksonville), Florida. While we are continuing
our Fresh operations at the facility, the closure will consolidate
production into our Georgia facility and improve our capacity
utilization.
“We also made progress toward unifying procurement, freight and
back-office activities across our business segments. In addition,
we completed the first round of SKU rationalization, eliminating
approximately 5% of total SKUs. I am pleased with our progress to
date and am optimistic that we will see improved profitability in
2022.
“I believe that by filling two key leadership roles with Mariela
Matute as CFO and Graciela Montgomery as CHRO, we are well on our
way to building a strong leadership team. We have made progress in
our search for a permanent CEO, and we are in final rounds of
interviews with several outstanding candidates. I am confident we
will be selecting a new CEO soon who will lead Calavo’s growth for
years to come.”
Fourth Quarter 2021 Consolidated Financial
Review Total revenue for the fourth quarter 2021 was
$273.4 million, compared to $234.4 million for the fourth quarter
2020, an increase of 17%. Fresh segment sales increased 26%, and
the RFG and Foods business segments generated sales growth of 7%
and 6%, respectively. The average selling price of avocados in the
Company’s Fresh segment was higher by 37% while volumes were 7%
lower than the prior-year period due to sub-optimal sizes in August
in both California and Mexico.
Gross profit for the fourth quarter was $9.1 million, or 3.3% of
revenue, compared to $21.2 million, or 9.0% of revenue, for the
same period last year. The decrease in gross profit margin
reflected inflationary pressures on labor, raw materials and
freight, volume declines in the Fresh segment as a result of the
product and size mix in late summer and increased fruit costs in
the Foods segment.
Selling, general and administrative (SG&A) expense for the
fourth quarter totaled $16.3 million, or 6.0% of revenue, compared
to $13.7 million, or 5.9% of revenue, for the same period last
year. The year-over-year increase in SG&A expense primarily was
related to increases in outside services and insurance
expenses.
Net loss, including a $9.7 million impairment from our Florida
operations, for the fourth quarter was $(13.0) million, or $(0.73)
per share. This compares with net income of $6.2 million, or $0.35
per diluted share, for the same period last year.
Adjusted net loss was $(1.4) million, or $(0.08) per share, for
the fourth quarter, compared to adjusted net income of $6.0
million, or $0.34 per diluted share, for the same period last
year.
Adjusted EBITDA was $1.4 million for the fourth quarter of 2021,
compared to $13.4 million for the same period last year.
Balance Sheet and LiquidityCash and cash
equivalents totaled $2.9 million as of October 31, 2021. Total
liquidity at quarter end was approximately $141.2 million,
including unrestricted cash, investments and borrowings available
under a line of credit.
The Company ended the quarter with $44.8 million of total debt,
which included $37.7 million of borrowings under its line of credit
and $7.1 million of long-term obligations and finance leases.
Fourth Quarter Business Segment Performance
FreshFourth quarter 2021 sales in Calavo’s Fresh business segment
were $149.8 million, up from $118.9 million for the same period
last year. Avocado prices were 37% higher year-over-year, partially
offset by 7% lower volume due to sub-optimal fruit sizes and mix
from Mexico and California in the late summer. Fresh segment gross
profit for the fourth quarter of 2021 was $7.4 million, or 5.0% of
segment sales, compared to $8.8 million, or 7.4% of segment sales,
for the same period last year. The decrease in gross profit was
primarily due to the lower volume at gross margin per carton below
historical averages.
Renaissance Food Group (RFG) RFG business segment sales in the
fourth quarter of 2021 were $106.1 million, up 7% from $99.3
million in the same period last year reflecting a volume increase
of 2% year-over-year, favorable product mix and price increases.
Segment gross profit was a loss of $0.2 million, down from gross
profit of $7.7 million for the same period last year. Gross margin
was adversely affected by market-wide factors such as higher labor,
material and freight costs. We have begun to implement price
increases to offset these increased costs.
Foods Sales in the Foods segment totaled $19.1 million for the
fourth quarter 2021, 6% higher than $17.9 million in the same
period last year due to improved foodservice demand and, to a
lesser extent, price increases achieved on certain products.
Segment gross profit totaled $1.9 million, or 9.8% of sales, for
the fourth quarter, compared to $4.6 million, or 25.7% of sales,
for the same period last year. The decrease in gross profit for the
fourth quarter was mainly due to year-over-year increases in
avocado and labor costs.
OutlookWhile demand for fresh, healthy and
convenient products remains strong, the industry-wide inflationary
pressures on raw materials, freight and labor costs remain
uncertain. We are implementing pricing and operational initiatives
to offset these items. We are optimistic that we will see continued
profit improvement from our efforts as part of Project Uno.
Non-GAAP Financial MeasuresThis press release
includes non-GAAP measures such as EBITDA, adjusted EBITDA,
adjusted net income and adjusted diluted EPS, which are not
prepared in accordance with U.S. generally accepted accounting
principles, or “GAAP.”
EBITDA is defined as net income (loss) attributable to Calavo
Growers, Inc. excluding (1) interest income and expense, (2) income
tax (benefit) provision, (3) depreciation and amortization and (4)
stock-based compensation expense. Adjusted EBITDA is EBITDA with
further adjustments for (1) non-cash net losses recognized from
unconsolidated entities, (2) goodwill impairment, (3) write-off of
long-lived assets, (4) acquisition-related costs, (5)
restructuring-related costs, including certain severance costs, (6)
certain litigation and other related costs, and (7) one-time items.
Adjusted EBITDA is a primary metric by which management evaluates
the operating performance of the business, on which certain
operating expenditures and internal budgets are based. The
adjustments to calculate EBITDA and adjusted EBITDA are items
recognized and recorded under GAAP in particular periods but might
be viewed as not necessarily coinciding with the underlying
business operations for the periods in which they are so recognized
and recorded.
Adjusted net income is defined as net income (loss) attributable
to Calavo Growers, Inc. excluding (1) non-cash net losses
recognized from unconsolidated entities, (2) goodwill impairment,
(3) write-off of long-lived assets, (4) acquisition-related costs,
(5) restructuring-related costs, including certain severance costs,
(6) certain litigation and other related costs, and (7) one-time
items. Adjusted net income and the related measure of adjusted
diluted EPS exclude certain items that are recognized and recorded
under GAAP in particular periods but might be viewed as not
necessarily coinciding with the underlying business operations for
the periods in which they are so recognized and recorded. We
believe adjusted net income affords investors a different view of
the overall financial performance of the Company than adjusted
EBITDA and the GAAP measure of net income (loss) attributable to
Calavo Growers, Inc. Additionally, the Company’s senior management
is compensated in part on the basis of Adjusted Net Income.
Reconciliations of non-GAAP financial measures to the most
directly comparable GAAP financial measures are provided in the
financial tables that accompany this release.
Items are considered one-time in nature if they are
non-recurring, infrequent or unusual and have not occurred in the
past two years or are not expected to recur in the next two years,
in accordance with SEC rules. One-time items are identified in the
notes to the reconciliations in the financial tables that accompany
this release.
Non-GAAP information should be considered as supplemental in
nature and not as a substitute for, or superior to, any measure of
performance prepared in accordance with GAAP. None of these metrics
are presented as measures of liquidity. The way the Company
measures EBITDA, adjusted EBITDA, adjusted net income and adjusted
diluted EPS may not be comparable to similarly titled measures
presented by other companies and may not be identical to
corresponding measures used in Company agreements.
Conference Call and WebcastCalavo will host a
conference call, today at 5:00 pm ET/2:00 pm PT to discuss its
financial results. The conference call may be accessed by dialing
877-407-3982 (Domestic) or 201-493-6780 (International) with
conference ID: 13725117. A live audio webcast of the call also will
be available on the Investor Relations section of Calavo’s website
at http://ir.calavo.com and will be archived for replay.
About Calavo Growers, Inc.Calavo Growers, Inc.
is a global avocado-industry leader and provider of value-added
fresh food serving retail grocery, foodservice, club stores, mass
merchandisers, food distributors and wholesalers worldwide. The
Company’s Fresh segment procures and markets fresh avocados and
select other fresh produce, including tomatoes and papayas. The
Renaissance Food Group (RFG) segment creates, markets and
distributes a portfolio of healthy, fresh foods, including
fresh-cut fruit, fresh-cut vegetables and prepared foods. The Foods
segment manufactures and distributes guacamole and salsa. Founded
in 1924, Calavo’s fresh food products are sold under the respected
Calavo brand name as well as Garden Highway, Chef Essentials and a
variety of private label and store brands.
Safe Harbor Statement This press release
contains statements relating to future events and results of Calavo
(including certain projections and business trends) that are
"forward-looking statements," as defined in the Private Securities
Litigation Reform Act of 1995, that involve risks, uncertainties
and assumptions. These statements are based on our current
expectations and are not promises or guarantees. If any of the
risks or uncertainties ever materialize or the assumptions prove
incorrect, the results of Calavo may differ materially from those
expressed or implied by such forward-looking statements and
assumptions. The use of words such as "anticipates," "estimates,"
"expects," "projects," "intends," "plans" and "believes," among
others, generally identify forward-looking statements.
Risks and uncertainties that may cause our actual results to be
materially different from any future results expressed or implied
by the forward-looking statements include, but are not limited to,
the following: the impact of the COVID-19 pandemic on our business,
results of operations, and financial condition, including, but not
limited to, disruptions in the manufacturing of our products and
the operations of the related supply chains supporting our ability
to deliver our products to consumers, impacts on our employees and
uncertainty regarding our ability to implement health and safety
measures for our employees, uncertainties regarding consumer demand
for our products, impact on our food service customers, increased
costs, the impact of governmental trade restrictions imposed as a
result of COVID-19 and the possible adverse impact of COVID-19 on
our goodwill and other intangible assets; our ability to raise
prices, particularly in our RFG and Foods segments, to offset
increase costs of goods sold, and the impact of such price
increases on future net sales; seasonality of our business;
sensitivity of our business to changes in market prices of avocados
and other agricultural products and other raw materials including
fuel, packaging and paper; potential disruptions to our supply
chain; risks associated with potential future acquisitions,
including integration; potential exposure to data breaches and
other cyber-attacks on our systems or those of our suppliers or
customers; dependence on large customers; dependence on key
personnel and the ability of our management team to work together
successfully; potential for labor disputes; reliance on co-packers
for a portion of our production needs; competitive pressures,
including from foreign growers; risks of recalls and food-related
injuries to our customers; changing consumer preferences; the
impact of environmental regulations, including those related to
climate change; our ability to develop and transition new products
and services and enhance existing products and services to meet
customer needs; risks associated with doing business
internationally (including possible restrictive U.S. and foreign
governmental actions, such as restrictions on transfers of funds
and COVID-19 and trade protection measures such as
import/export/customs duties, tariffs and/or quotas and currency
fluctuations); risks associated with receivables from, loans to
and/or equity investments in unconsolidated entities; volatility in
the value of our common stock; the impact of macroeconomic trends
and events; and the resolution of pending investigations, legal
claims and tax disputes, including an assessment imposed by the
Mexican Tax Administrative Service (the “SAT”) and our defenses
against collection activities commenced by the SAT.
For a further discussion of these risks and uncertainties and
other risks and uncertainties that we face, please see the risk
factors described in our most recent Annual Report on Form 10-K
filed with the Securities and Exchange Commission and any
subsequent updates that may be contained in our Quarterly Reports
on Form 10-Q and other filings with the Securities and Exchange
Commission. Forward-looking statements contained in this press
release are made only as of the date of this press release, and we
undertake no obligation to update or revise the forward-looking
statements, whether as a result of new information, future events
or otherwise.
Investor Contact:Financial Profiles, Inc.Julie Kegley, Senior
Vice President310-622-8246calavo@finprofiles.com
|
CALAVO GROWERS, INC.CONSOLIDATED CONDENSED
BALANCE SHEETS (UNAUDITED)(in
thousands) |
|
|
|
|
|
|
|
|
|
|
October 31, |
|
October 31, |
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,885 |
|
$ |
4,055 |
|
Restricted cash |
|
|
970 |
|
|
— |
|
Accounts receivable, net of allowances of $4,816 (2021) and $3,498
(2020) |
|
|
78,866 |
|
|
63,668 |
|
Inventories |
|
|
40,757 |
|
|
41,787 |
|
Prepaid expenses and other current assets |
|
|
11,946 |
|
|
10,733 |
|
Advances to suppliers |
|
|
6,693 |
|
|
5,061 |
|
Income taxes receivable |
|
|
11,524 |
|
|
10,591 |
|
Total current assets |
|
|
152,641 |
|
|
135,895 |
|
Property, plant, and equipment, net |
|
|
118,280 |
|
|
130,270 |
|
Operating lease right-of-use assets |
|
|
59,842 |
|
|
60,262 |
|
Investment in Limoneira Company |
|
|
27,055 |
|
|
23,197 |
|
Investments in unconsolidated entities |
|
|
4,346 |
|
|
6,065 |
|
Deferred income taxes |
|
|
5,316 |
|
|
2,486 |
|
Goodwill |
|
|
28,653 |
|
|
28,568 |
|
Intangibles, net |
|
|
8,769 |
|
|
10,323 |
|
Other assets |
|
|
40,500 |
|
|
32,558 |
|
|
|
$ |
445,402 |
|
$ |
429,624 |
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Payable to growers |
|
$ |
23,033 |
|
$ |
11,346 |
|
Trade accounts payable |
|
|
9,794 |
|
|
9,384 |
|
Accrued expenses |
|
|
42,063 |
|
|
36,922 |
|
Borrowings pursuant to credit facilities, current |
|
|
— |
|
|
20,550 |
|
Dividend payable |
|
|
20,330 |
|
|
20,343 |
|
Other current liabilities |
|
|
11,000 |
|
|
— |
|
Current portion of operating leases |
|
|
6,817 |
|
|
6,443 |
|
Current portion of long-term obligations and finance leases |
|
|
1,587 |
|
|
1,343 |
|
Total current liabilities |
|
|
114,624 |
|
|
106,331 |
|
Long-term liabilities: |
|
|
|
|
|
|
|
Borrowings pursuant to credit facilities, long-term |
|
|
37,700 |
|
|
— |
|
Long-term operating leases, less current portion |
|
|
57,561 |
|
|
58,273 |
|
Long-term obligations and finance leases, less current portion |
|
|
5,553 |
|
|
5,716 |
|
Other long-term liabilities |
|
|
3,081 |
|
|
3,302 |
|
Total long-term liabilities |
|
|
103,895 |
|
|
67,291 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
Total shareholders' equity |
|
|
226,883 |
|
|
256,002 |
|
|
|
$ |
445,402 |
|
$ |
429,624 |
|
CALAVO GROWERS, INC.CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS (UNAUDITED)(in thousands,
except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year ended |
|
|
October 31, |
|
October 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
273,424 |
|
|
$ |
234,430 |
|
|
$ |
1,055,830 |
|
|
$ |
1,059,371 |
|
Cost of sales |
|
|
264,305 |
|
|
|
213,250 |
|
|
|
998,405 |
|
|
|
969,473 |
|
Gross profit |
|
|
9,119 |
|
|
|
21,180 |
|
|
|
57,425 |
|
|
|
89,898 |
|
Selling, general and administrative |
|
|
16,305 |
|
|
|
13,726 |
|
|
|
56,679 |
|
|
|
57,952 |
|
Expenses related to Mexican tax matters |
|
|
455 |
|
|
|
— |
|
|
|
1,797 |
|
|
|
— |
|
Impairment and charges related to RFG Florida facility closure |
|
|
9,162 |
|
|
|
— |
|
|
|
9,162 |
|
|
|
— |
|
Gain on sale of Temecula packinghouse |
|
|
(54 |
) |
|
|
(54 |
) |
|
|
(216 |
) |
|
|
(216 |
) |
Operating income (loss) |
|
|
(16,749 |
) |
|
|
7,508 |
|
|
|
(9,997 |
) |
|
|
32,162 |
|
Interest expense |
|
|
(225 |
) |
|
|
(145 |
) |
|
|
(798 |
) |
|
|
(877 |
) |
Other income, net |
|
|
559 |
|
|
|
301 |
|
|
|
1,351 |
|
|
|
2,551 |
|
Recovery (loss) on reserve for
FreshRealm note receivable and impairment of investment |
|
|
— |
|
|
|
(130 |
) |
|
|
6,130 |
|
|
|
(37,322 |
) |
Unrealized net gain (loss) on
Limoneira shares |
|
|
(2,985 |
) |
|
|
588 |
|
|
|
3,858 |
|
|
|
(8,537 |
) |
Income (loss) before income
taxes (benefit) and income (loss) from unconsolidated entities |
|
|
(19,400 |
) |
|
|
8,122 |
|
|
|
544 |
|
|
|
(12,023 |
) |
Income tax (provision) benefit |
|
|
6,326 |
|
|
|
(2,248 |
) |
|
|
(10,747 |
) |
|
|
4,292 |
|
Net income (loss) from unconsolidated entities |
|
|
36 |
|
|
|
265 |
|
|
|
(1,719 |
) |
|
|
(6,110 |
) |
Net income (loss) |
|
|
(13,038 |
) |
|
|
6,139 |
|
|
|
(11,922 |
) |
|
|
(13,841 |
) |
Add: Net loss attributable to noncontrolling interest |
|
|
83 |
|
|
|
88 |
|
|
|
104 |
|
|
|
216 |
|
Net income (loss) attributable to Calavo Growers, Inc. |
|
$ |
(12,955 |
) |
|
$ |
6,227 |
|
|
$ |
(11,818 |
) |
|
$ |
(13,625 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Calavo Growers, Inc.’s net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.73 |
) |
|
$ |
0.35 |
|
|
$ |
(0.67 |
) |
|
$ |
(0.78 |
) |
Diluted |
|
$ |
(0.73 |
) |
|
$ |
0.35 |
|
|
$ |
(0.67 |
) |
|
$ |
(0.78 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in per share computation: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
17,635 |
|
|
|
17,586 |
|
|
|
17,621 |
|
|
|
17,564 |
|
Diluted |
|
|
17,635 |
|
|
|
17,666 |
|
|
|
17,621 |
|
|
|
17,564 |
|
CALAVO GROWERS, INC.NET SALES AND GROSS
PROFIT BY BUSINESS SEGMENT (UNAUDITED)(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresh |
|
|
|
Calavo |
|
Interco. |
|
|
|
|
|
products |
|
RFG |
|
Foods |
|
Elimins. |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
October 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
149,802 |
|
$ |
106,091 |
|
|
$ |
19,059 |
|
$ |
(1,528 |
) |
|
$ |
273,424 |
Cost of sales |
|
|
142,370 |
|
|
106,270 |
|
|
|
17,193 |
|
|
(1,528 |
) |
|
|
264,305 |
Gross profit (loss) |
|
$ |
7,432 |
|
$ |
(179 |
) |
|
$ |
1,866 |
|
$ |
— |
|
|
$ |
9,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
October 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
118,855 |
|
$ |
99,337 |
|
|
$ |
17,916 |
|
$ |
(1,678 |
) |
|
$ |
234,430 |
Cost of sales |
|
|
110,013 |
|
|
91,611 |
|
|
|
13,304 |
|
|
(1,678 |
) |
|
|
213,250 |
Gross profit |
|
$ |
8,842 |
|
$ |
7,726 |
|
|
$ |
4,612 |
|
$ |
— |
|
|
$ |
21,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended October
31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
588,527 |
|
$ |
396,472 |
|
|
$ |
77,566 |
|
$ |
(6,735 |
) |
|
$ |
1,055,830 |
Cost of sales |
|
|
540,740 |
|
|
399,974 |
|
|
|
64,426 |
|
|
(6,735 |
) |
|
|
998,405 |
Gross profit (loss) |
|
$ |
47,787 |
|
$ |
(3,502 |
) |
|
$ |
13,140 |
|
$ |
— |
|
|
$ |
57,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended October 31,
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
585,052 |
|
$ |
404,723 |
|
|
$ |
75,220 |
|
$ |
(5,624 |
) |
|
$ |
1,059,371 |
Cost of sales |
|
|
537,489 |
|
|
383,331 |
|
|
|
54,277 |
|
|
(5,624 |
) |
|
|
969,473 |
Gross profit |
|
$ |
47,563 |
|
$ |
21,392 |
|
|
$ |
20,943 |
|
$ |
— |
|
|
$ |
89,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended October 31, 2021 and 2020,
intercompany sales and cost of sales of $0.6 million and $0.6
million between Fresh products and RFG were eliminated. For the
year ended October 31, 2021 and 2020, intercompany sales and cost
of sales of $2.5 million and $1.7 million between Fresh
products and RFG were eliminated. For the three months ended
October 31, 2021 and 2020, intercompany sales and cost of sales of
$0.9 million and $1.1 million between Calavo Foods and RFG were
eliminated. For the year ended October 31, 2021 and 2020,
intercompany sales and cost of sales of $4.2 million and $4.0
million between Calavo Foods and RFG were eliminated.
CALAVO GROWERS, INC.RECONCILIATION OF
ADJUSTED NET INCOME AND EPS (UNAUDITED)(in
thousands, except per share amounts) |
|
The following
table presents adjusted net income and adjusted diluted EPS, each a
non-GAAP measure, and reconciles them to net income (loss)
attributable to Calavo Growers, Inc., and Diluted EPS, which
are the most directly comparable GAAP measures. See “Non-GAAP
Financial Measures” earlier in this release. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended October
31, |
|
Year ended October
31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income (loss) attributable to Calavo Growers, Inc. |
|
$ |
(12,955 |
) |
|
$ |
6,227 |
|
|
$ |
(11,818 |
) |
|
$ |
(13,625 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash losses (income) from
unconsolidated entities (a) |
|
|
(36 |
) |
|
|
(265 |
) |
|
|
1,719 |
|
|
|
6,110 |
|
Loss (Recovery) from
FreshRealm and other related expenses (b) |
|
|
— |
|
|
|
385 |
|
|
|
(5,989 |
) |
|
|
37,577 |
|
Certain management transition
expenses (c) |
|
|
662 |
|
|
|
— |
|
|
|
1,347 |
|
|
|
1,119 |
|
Acquisition costs (d) |
|
|
— |
|
|
|
— |
|
|
|
262 |
|
|
|
510 |
|
Net (gain) loss on Limoneira
shares (e) |
|
|
2,985 |
|
|
|
(588 |
) |
|
|
(3,858 |
) |
|
|
8,537 |
|
RFG rent expense add back
(f) |
|
|
108 |
|
|
|
108 |
|
|
|
396 |
|
|
|
108 |
|
Mexican tax matters (g) |
|
|
455 |
|
|
|
— |
|
|
|
14,270 |
|
|
|
— |
|
Restructure costs –
consulting, management recruiting and severance (h) |
|
|
1,708 |
|
|
|
— |
|
|
|
1,833 |
|
|
|
— |
|
Impairment and charges related
to closure of RFG Florida facility (i) |
|
|
9,748 |
|
|
|
— |
|
|
|
9,748 |
|
|
|
— |
|
Tax impact of adjustments
(j) |
|
|
(4,095 |
) |
|
|
96 |
|
|
|
(1,690 |
) |
|
|
(12,773 |
) |
Adjusted net income (loss)
attributed to Calavo Growers, Inc. |
|
$ |
(1,420 |
) |
|
$ |
5,963 |
|
|
$ |
6,220 |
|
|
$ |
27,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calavo Growers, Inc.’s net
income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP) |
|
$ |
(0.73 |
) |
|
$ |
0.35 |
|
|
$ |
(0.67 |
) |
|
$ |
(0.78 |
) |
Adjusted Diluted EPS |
|
$ |
(0.08 |
) |
|
$ |
0.34 |
|
|
$ |
0.35 |
|
|
$ |
1.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in per
share computation: |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
17,635 |
|
|
|
17,666 |
|
|
|
17,621 |
|
|
|
17,564 |
|
|
________________________________ |
|
|
(a) |
For the year ended October 31, 2020, FreshRealm incurred losses
totaling $24.1 million, of which we recorded $7.2 million of
non-cash losses during fiscal 2020. For the
three months ended October 31, 2021 and 2020, we recorded
income from Agricola Don Memo totaling of less than $0.1 million
and $0.3 million. For the year ended October 31, 2021,
and 2020, we incurred losses from Agricola Don Memo totaling $1.7
million, and income totaling $1.2 million. |
|
|
(b) |
In July 2021, as part of the FreshRealm Separation
Agreement, FreshRealm paid Calavo the Loan Payoff Amount of $6.0
million, and we recorded the receipt on the statement of operations
as a recovery of the reserve for collectability of the FreshRealm
note receivable. In addition, we recovered $0.1 million in
receivables that we previously reserved. During the third quarter
of fiscal 2020, the results of operations of FreshRealm have
deteriorated significantly from our expectations three months
earlier, with declining sales and continuing losses. We recorded an
impairment of 100% of our equity investment of $2.8 million, and we
recorded a reserve for 100% of our note receivable of 34.2 million
(which includes accrued interest of $4.1 million), and $0.3 million
in trade accounts receivable as of October 31, 2020, which
resulted in a loss of $37.3 million. For the three months ended
October 31, 2020, we incurred $0.3 million of professional fees
related to FreshRealm and to the Loss on reserve for FreshRealm
note receivable and impairment of investment. For the year ended
October 31, 2021 and 2020, we incurred $0.1 million and $0.3
million of professional fees related to FreshRealm and to the Loss
on reserve for FreshRealm note receivable and impairment of
investment. |
|
|
(c) |
For fiscal 2021 and 2020, results include stock-based
compensation expense related to senior management transitions,
which does not impact the underlying cost structure of the
company. |
|
|
(d) |
In the first quarter of fiscal 2021, we incurred professional
service costs related to a considered but non-consummated
acquisition. In fiscal 2020, we incurred expenses related to the
acquisition of SFFI Company, Inc. doing business as Simply Fresh
(SFFI). SFFI is a processor and supplier of a broad line of
fresh-cut fruit, principally serving the foodservice and
hospitality markets. |
|
|
(e) |
Under GAAP we are required to record changes in fair value of
equity investments, including our investment in Limoneira (LMNR)
common stock, in net income during the period. For the
three months ended October 31, 2021, and 2020, we recorded losses
of $3.0 million, and income of $0.6 million in unrealized net
(gain) losses related to these mark-to-market
adjustments. For the year ended October 31, 2021, and
2020, we recorded income of $3.9 million, and losses of $8.5
million in unrealized net gain (loss) on Limoneira shares related
to these mark-to-market adjustments. |
|
|
(f) |
For the three months ended October 31, 2021 and 2020, we
incurred $0.1 million related to rent paid for RFG corporate office
space that we have vacated and plan to sublease. For the year ended
October 31, 2021 and 2020, we incurred $0.4 million and $0.1
million related to rent paid for RFG corporate office space that we
have vacated and plan to sublease. |
|
|
(g) |
In June 2021, we paid $2.4 million in full settlement of
the 2011 Assessment. Of this amount, $1.5 million has been recorded
as a discrete item in Income Tax Provision and $0.9 million is
related to Value Added Tax expense and recorded as Expenses related
to the Mexican tax matters. An additional $0.3 million of related
professional fees have also been recorded as expenses related to
the Mexican tax matters. |
|
|
|
In July 2021, based on our evaluation of the most probable
outcomes of the 2013 Assessment, we recorded an accrual of $11
million in the accompanying financial statements as a discrete item
in Income Tax Provision. An additional $0.1 million of related
professional fees have also been recorded as Expenses related to
the Mexican tax matters. |
|
|
|
For the three months ended October 31, 2021, we incurred
professional fees of $0.5 million related to the Mexican tax
matters. |
|
|
|
See Note 7 to the consolidated financial statements included in
the Annual Report on Form 10-K for the year ended October 31, 2021
for further information. |
|
|
(h) |
For the three months ended October 31, 2021, we recorded
$0.8 million of consulting expenses related to an enterprise-wide
strategic business operations study conducted by a third-party
management consulting organization for the purpose of restructuring
to improve the profitability of the organization and efficiency of
its operations. For the year ended October 31, 2021, we incurred
$0.9 million on consulting expenses described above.
For the three months ended October 31, 2021, we incurred $0.9
million related to management recruiting and severance costs in
connection with the restructuring initiative. |
|
|
(i) |
On October 18, 2021, we announced the discontinuation of RFG’s
food processing operations at our Green Cove Springs (near
Jacksonville), Florida facility as part of our Project Uno profit
improvement program. As of November 15, the Green Cove facility of
RFG has ceased operations. We wrote down $8.7 million of leasehold
improvements, $0.1 million of equipment, and $0.6 million of
inventory (recognized through cost of goods sold). We also paid
$0.4 million in employee severance. |
|
|
(j) |
Tax impact of non-GAAP adjustments are based on the prevailing
year-to-date tax rates in each period and adjusted for any one-time
discreet items. |
|
|
CALAVO GROWERS, INC.RECONCILIATION OF
EBITDA AND ADJUSTED EBITDA (UNAUDITED)(in
thousands, except per share amounts) |
|
The following
table presents EBITDA and adjusted EBITDA, each a non-GAAP measure,
and reconciles them to net income (loss) attributable to Calavo
Growers, Inc., which is the most directly comparable GAAP
measure. See “Non-GAAP Financial Measures” earlier in this
release. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended October
31, |
|
Year ended October
31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income (loss) attributable to Calavo Growers, Inc. |
|
$ |
(12,955 |
) |
|
$ |
6,227 |
|
|
$ |
(11,818 |
) |
|
$ |
(13,625 |
) |
Interest Income |
|
|
(277 |
) |
|
|
(65 |
) |
|
|
(335 |
) |
|
|
(1,998 |
) |
Interest Expense |
|
|
225 |
|
|
|
145 |
|
|
|
798 |
|
|
|
877 |
|
Provision (benefit) for Income
Taxes |
|
|
(6,326 |
) |
|
|
2,248 |
|
|
|
10,747 |
|
|
|
(4,292 |
) |
Depreciation &
Amortization |
|
|
4,646 |
|
|
|
4,243 |
|
|
|
17,571 |
|
|
|
16,093 |
|
Stock-Based Compensation
(c) |
|
|
1,132 |
|
|
|
918 |
|
|
|
3,950 |
|
|
|
4,487 |
|
EBITDA |
|
$ |
(13,555 |
) |
|
$ |
13,716 |
|
|
$ |
20,913 |
|
|
$ |
1,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash losses (income) from
unconsolidated entities (a) |
|
|
(36 |
) |
|
|
(265 |
) |
|
|
1,719 |
|
|
|
6,110 |
|
Net (gain) loss on Limoneira
shares (e) |
|
|
2,985 |
|
|
|
(588 |
) |
|
|
(3,858 |
) |
|
|
8,537 |
|
Loss (Recovery) from
FreshRealm and other related expenses (b) |
|
|
— |
|
|
|
385 |
|
|
|
(5,989 |
) |
|
|
37,577 |
|
RFG rent expense add back
(f) |
|
|
108 |
|
|
|
108 |
|
|
|
396 |
|
|
|
108 |
|
Acquisition costs (d) |
|
|
— |
|
|
|
— |
|
|
|
262 |
|
|
|
510 |
|
Restructure costs -
consulting, management recruiting and severance (h) |
|
|
1,708 |
|
|
|
— |
|
|
|
1,833 |
|
|
|
— |
|
Expenses related to Mexican
tax matters (g) |
|
|
455 |
|
|
|
— |
|
|
|
1,797 |
|
|
|
— |
|
Impairment and charges related
to closure of RFG Florida facility (i) |
|
|
9,748 |
|
|
|
— |
|
|
|
9,748 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
1,413 |
|
|
$ |
13,356 |
|
|
$ |
26,821 |
|
|
$ |
54,384 |
|
Adjusted EBITDA per dilutive
share |
|
$ |
0.08 |
|
|
$ |
0.76 |
|
|
$ |
1.52 |
|
|
$ |
3.10 |
|
________________________________See prior page for footnote
references
CALAVO GROWERS, INC.OTHER INFORMATION
(UNAUDITED)(in thousands, except per pound
amounts) |
|
|
|
Three
months ended October
31, |
|
Year ended October
31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Pounds of avocados sold |
|
|
|
81,652 |
|
|
|
87,868 |
|
|
|
378,168 |
|
|
|
379,910 |
Pounds of processed avocado
products sold |
|
|
|
6,829 |
|
|
|
6,064 |
|
|
|
25,785 |
|
|
|
25,480 |
Average sales price per pound
- avocados |
|
|
$ |
1.68 |
|
|
$ |
1.23 |
|
|
$ |
1.41 |
|
|
$ |
1.37 |
Gross profit per pound -
avocados |
|
|
$ |
0.08 |
|
|
$ |
0.10 |
|
|
$ |
0.11 |
|
|
$ |
0.11 |
Average sales price per pound
– processed avocado products |
|
|
$ |
2.92 |
|
|
$ |
2.85 |
|
|
$ |
2.89 |
|
|
$ |
2.84 |
Gross profit per pound –
processed avocado products |
|
|
$ |
0.29 |
|
|
$ |
0.77 |
|
|
$ |
0.51 |
|
|
$ |
0.82 |
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