Calavo Growers, Inc. (NASDAQ:CVGW) Q1 2022 Earnings Conference Call March 14, 2022 5:00 PM ET Company Participants Larry Clark - IR Brian Kocher - President and CEO Mariela Matute - CFO Conference Call Participants Ben Bienvenu - Stephens Robert Dickerson - Jefferies Ben Klieve - Lake Street Capital Eric Larson - Seaport Research Partners Mitchell Pinheiro - Sturdivant and Company Operator Good afternoon and welcome to the First Quarter 2022 Calavo Growers Earnings Conference Call and Webcast. [Operator Ins ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |-------------------------------------------------------------------------|------------------------------------------------------------------------------------- ...

Financial Data and Key Metrics Changes - In Q4 2021, consolidated revenue increased by 17% year-over-year, primarily driven by a 26% increase in the Fresh segment, which saw a 37% rise in average selling price for avocados, despite a 7% decline in volume [23][24] - Gross profit margins declined year-over-year due to lower volume and higher costs, with RFG gross profit down nearly $8 million due to market-wide pressures [27][28] - The company ended the quarter with $141 million in cash and liquid investments, maintaining a strong financial position and low leverage [32] Business Segment Data and Key Metrics Changes - Fresh segment revenue increased by 26%, driven by higher average selling prices, while RFG revenue rose by 7% due to a favorable product mix and price increases [23][24] - The Food segment experienced a 6% increase in sales, mainly from higher volume from foodservice customers and price increases [24] - Project Uno is expected to yield an annualized EBITDA increase of $70 million, with a total one-time cost of approximately $30 million [15][30] Market Data and Key Metrics Changes - U.S. avocado demand continues to grow, with per capita consumption exceeding 9 pounds, double the rate from a decade ago [7][8] - The Hispanic population in the U.S., a key consumer group for avocados, is expected to double by 2050, further driving demand [9] Company Strategy and Development Direction - The company is focused on Project Uno, which aims to unify supply chains and drive synergies across divisions, with over 40 initiatives already in progress [15][65] - The opening of the Jalisco facility for avocado shipments to the U.S. is expected to provide flexibility in managing supply and demand, enhancing margin opportunities [11][43] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2021, including labor shortages and high freight costs, but noted improvements in market conditions as they entered Q1 2022 [5][6] - The long-term outlook remains favorable, although current market conditions make it difficult to predict when inflationary pressures will ease [35] Other Important Information - The company announced a $1.15 per share annual dividend, consistent with the previous year, continuing a tradition since going public in 2002 [6] - The board plans to reduce its size from 11 to 9 directors, aligning with the company's size [16] Q&A Session Summary Question: Can you provide insight on the progression through fiscal 2022 and major milestones for Project Uno? - Management expects proportional benefits from Project Uno each quarter, with investments needed initially to realize these benefits [38] Question: What is the size and expected capacity utilization of the Jalisco facility? - The Jalisco facility is about half the size of the Michoacan facility and is expected to start shipments in April, providing another avenue for supply [43] Question: How are pricing and volume dynamics affecting gross margins? - Higher prices are expected to improve margins, but the company is also focused on increasing volume to lower packing costs [50] Question: What is the outlook for the RFG segment's gross margins? - The closure of the Jacksonville facility is expected to yield annualized savings of $4 million to $6 million, positively impacting gross margins [53] Question: How is the company managing labor costs and pricing in the current environment? - Labor costs have stabilized, and retail partners have been amenable to price increases, allowing the company to manage costs effectively [72]

Callavo. CALAVO GROWERS, INC. INVESTOR PRESENTATION NASDAQ GS: CVGW DECEMBER 2021 SAFE HARBOR STATEMENT This presentation 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 o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-33385 CALAVO GROWERS, INC. (Exact name of registrant as specified in its charter) California 33-0945304 (State of Other Jurisdiction of incorporation or Organization) (I.R.S. Emp ...

Calavo Growers, Inc. (NASDAQ:CVGW) Q3 2021 Earnings Conference Call September 8, 2021 5:00 PM ET Company Participants Lisa Mueller - IR Steve Hollister - Interim CEO Farha Aslam - Interim CFO Conference Call Participants Benjamin Bienvenu - Stephens Rob Dickerson - Jefferies Mitchell Pinheiro - Sturdivant & Co., Inc. Ben Klieve - Lake Street Capital Markets Eric Larson - Seaport Global Greetings. Welcome to the Calavo Growers Third Quarter 2021 Earnings Call. At this time, all participants are in listen-onl ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________________ to ______________________ Commission file number: 000-33385 CALAVO GROWERS, INC. (Exact name of registrant as specified in its ch ...

Calavo Growers, Inc. (NASDAQ:CVGW) Q2 2021 Earnings Conference Call June 8, 2021 5:00 PM ET Company Participants Lisa Mueller - Senior Vice President of Financial Profiles, Inc. James Gibson - Chief Executive Officer Kevin Manion - Chief Financial Officer Conference Call Participants Benjamin Bienvenu - Stephens Inc. Mitchell Pinheiro - Sturdivant & Co., Inc. Benjamin Klieve - Lake Street Capital Markets, LLC Eric Larson - Seaport Global Securities LLC Operator Greetings, and welcome to the Calavo Growers, ...

[Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements, emphasizing that future results may differ materially due to various risks including COVID-19, market volatility, and supply chain disruptions - Key risks include the ongoing impact of the COVID-19 pandemic on operations, supply chains, and consumer demand[7](index=7&type=chunk) - Business seasonality and sensitivity to market price changes for avocados and other agricultural products[7](index=7&type=chunk) - Potential supply chain disruptions, risks from future acquisitions, and cybersecurity threats[7](index=7&type=chunk) - Dependence on large customers and key personnel[7](index=7&type=chunk) - Risks associated with international operations, including trade protection measures and currency fluctuations[7](index=7&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.Financial%20Statements%20(unaudited)) This section presents unaudited consolidated condensed financial statements, including balance sheets, statements of operations, cash flows, and shareholders' equity [Consolidated Condensed Balance Sheets](index=6&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) The balance sheet as of April 30, 2021, shows increased total assets, primarily from accounts receivable and inventories, alongside growth in total liabilities and shareholders' equity Consolidated Condensed Balance Sheet Highlights (in thousands) | Account | April 30, 2021 | October 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $170,387 | $135,895 | | **Total assets** | $474,310 | $429,624 | | **Total current liabilities** | $95,584 | $106,331 | | **Total liabilities** | $202,568 | $173,622 | | **Total shareholders' equity** | $271,742 | $256,002 | [Consolidated Condensed Statements of Operations](index=8&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Net sales for Q2 2021 slightly decreased, but net income significantly improved, largely due to an unrealized gain on Limoneira shares compared to a prior-year loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended April 30, 2021 | Three Months Ended April 30, 2020 | Six Months Ended April 30, 2021 | Six Months Ended April 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $276,821 | $281,166 | $497,399 | $554,516 | | **Gross profit** | $22,600 | $22,075 | $40,439 | $37,883 | | **Operating income** | $8,971 | $7,625 | $12,690 | $7,189 | | **Net income (loss) attributable to Calavo** | $8,841 | $(3,278) | $14,118 | $(4,216) | | **Diluted EPS** | $0.50 | $(0.19) | $0.80 | $(0.24) | [Consolidated Condensed Statements of Cash Flows](index=9&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved for the six months ended April 30, 2021, with investing activities primarily for property purchases Cash Flow Summary - Six Months Ended April 30 (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | **Net cash provided (used) by operating activities** | $10,423 | $(3,022) | | **Net cash used in investing activities** | $(8,985) | $(25,810) | | **Net cash provided by financing activities** | $89 | $24,143 | | **Net increase (decrease) in cash** | $1,527 | $(4,689) | [Notes to Consolidated Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) These notes provide critical context, detailing segment performance, significant tax assessments from Mexican authorities, the FreshRealm separation, and the amendment of the company's credit facility Net Sales by Segment - Six Months Ended April 30 (in thousands) | Segment | 2021 | 2020 | | :--- | :--- | :--- | | Fresh products | $275,902 | $303,358 | | RFG | $186,595 | $214,463 | | Calavo Foods | $34,902 | $36,695 | | **Total Net Sales** | **$497,399** | **$554,516** | - The company is contesting two tax assessments from Mexican authorities: a 2011 assessment for approximately **$109.0 million USD** and a 2013 assessment for approximately **$128.8 million USD**, which Calavo believes are without merit[72](index=72&type=chunk)[76](index=76&type=chunk) - On February 3, 2021, Calavo terminated its equity ownership in FreshRealm and restructured its **$34.5 million** loan, with potential future payments up to **$34 million** contingent on FreshRealm achieving certain valuation milestones[97](index=97&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - In January 2021, the company amended its credit facility, extending the maturity to January 2026 and increasing the revolving commitment from **$80 million** to **$100 million**[105](index=105&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting a slight decrease in Q2 2021 net sales but an increase in consolidated gross profit, alongside rising labor, commodity, and logistical costs [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Q2 2021 saw a slight decrease in net sales but an increase in gross profit, with varied performance across segments due to factors like avocado prices, cost pressures, and margin management Gross Profit by Segment (in thousands) | Segment | Three Months Ended April 30, 2021 | Three Months Ended April 30, 2020 | Six Months Ended April 30, 2021 | Six Months Ended April 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Fresh products | $15,008 | $14,405 | $28,153 | $20,987 | | RFG | $2,288 | $2,736 | $2,266 | $5,610 | | Calavo Foods | $5,304 | $4,934 | $10,020 | $11,286 | | **Total Gross Profit** | **$22,600** | **$22,075** | **$40,439** | **$37,883** | - The Fresh products segment's gross profit percentage increased in Q2 2021 due to more effective management of the spread between avocado sales prices and fruit costs[172](index=172&type=chunk) - RFG's gross profit declined due to increased commodity costs, labor shortages leading to higher overtime, and extraordinary weather events[177](index=177&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **6%** in Q2 2021 and **10%** in the six-month period, primarily due to lower staff-related costs and broker commissions[181](index=181&type=chunk)[182](index=182&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) The company provides non-GAAP metrics, with Adjusted Net Income and Adjusted EBITDA showing increases for Q2 2021, primarily after excluding unrealized gains/losses and unconsolidated entity losses Adjusted Net Income Reconciliation (in thousands) | Metric | Three Months Ended April 30, 2021 | Three Months Ended April 30, 2020 | | :--- | :--- | :--- | | **Net income (loss) attributable to Calavo** | $8,841 | $(3,278) | | Non-GAAP adjustments (net) | $(1,165) | $10,290 | | **Adjusted net income** | **$7,676** | **$7,012** | Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended April 30, 2021 | Three Months Ended April 30, 2020 | | :--- | :--- | :--- | | **Net income (loss) attributable to Calavo** | $8,841 | $(3,278) | | Adjustments (Interest, Taxes, D&A, etc.) | $8,380 | $4,243 | | **EBITDA** | $17,221 | $965 | | Further Adjustments | $(2,217) | $12,746 | | **Adjusted EBITDA** | **$15,004** | **$13,711** | [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) As of April 30, 2021, the company maintained strong liquidity with increased cash and working capital, supported by a substantial credit facility, deemed sufficient for future needs - Cash provided by operating activities was **$10.4 million** for the six months ended April 30, 2021, compared to cash used of **$3.0 million** in the prior year period[188](index=188&type=chunk) - Working capital stood at **$74.8 million** at April 30, 2021, a significant increase from **$29.6 million** at October 31, 2020[193](index=193&type=chunk) - The company has a **$100 million** credit facility expiring in January 2026, with **$42.3 million** outstanding as of April 30, 2021[194](index=194&type=chunk)[196](index=196&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include interest rate fluctuations on its variable-rate credit facility and foreign currency exchange risk, particularly with the Mexican peso - The company is exposed to interest rate risk through its variable-rate credit facility[201](index=201&type=chunk) - Significant operations in Mexico expose the company to foreign currency risk, with a remeasurement loss of **$0.5 million** recorded in Q2 2021[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting during the quarter - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of April 30, 2021[205](index=205&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation but does not anticipate any current proceedings will materially impact its financial statements - The company is not aware of any legal proceedings that would have a material adverse impact on its financials[206](index=206&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, highlighting increased labor, commodity, and logistical costs due to post-COVID economic recovery, expected to adversely affect operations - A key updated risk is the impact of the post-COVID economic climate, which is increasing costs for labor, commodities, and logistics, creating operational challenges[209](index=209&type=chunk)[210](index=210&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company withheld common shares from officers in December 2020 and February 2021 to satisfy tax withholding obligations related to equity award settlements - In Q1 and Q2 2021, Calavo withheld a combined **14,112** shares from officers to cover tax obligations on vested equity awards[211](index=211&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.Exhibits) This section lists all exhibits filed with the Form 10-Q, including the 2020 Equity Incentive Plan, FreshRealm separation agreements, and the third amendment to the credit agreement - Key exhibits filed include the 2020 Equity Incentive Plan, the Limited Liability Company Member Separation and Release Agreement with FreshRealm, and the Third Amendment to the Credit Agreement[213](index=213&type=chunk)

Business Overview - Calavo operates a diversified business model across three segments: Fresh, RFG (Renaissance Food Group), and Foods[4, 10] - The company has a strong market position due to its operating platform, supply chain control, and long-term relationships with growers and customers[10] - Calavo has a long track record of financial performance and a strong balance sheet[10] Financial Performance - Based on LTM Q1 2021, the revenue mix is Fresh (56%), RFG (37%), and Foods (7%)[4] - Based on LTM Q1 2021, the gross profit mix is Fresh (59%), RFG (20%), and Foods (21%)[8] - The company has a track record of sustainable growth and consistent annual dividend payout[41] Growth Opportunities and Strategies - Calavo aims to maximize operating leverage and synergies by consolidating its Fresh, RFG, and Foods segments[16, 17] - The company intends to drive organic growth in each operating segment and pursue strategic bolt-on acquisitions[16] - Calavo is focused on expanding its avocado and related food product portfolio in the U S and abroad[32] Avocado Market - The U S avocado consumption shows a significant growth opportunity, with 10.3 units per capita in some regions compared to 6.3 units per capita in others[24] - Avocado sales have shown a 10.1% volume growth, outperforming other fruits[25] - There is a significant opportunity to increase international consumption of avocados[26]