Core Insights - The consumer staples sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Group 1: Oversold Stocks - Oddity Tech Ltd (NASDAQ: ODD) has an RSI of 29.2, with a stock price decline of approximately 21% over the past month, closing at $40.26 [8] - Celsius Holdings Inc (NASDAQ: CELH) has an RSI of 29.1, with a stock price drop of around 27% in the last month, closing at $44.91 [8] - Calavo Growers Inc (NASDAQ: CVGW) also has an RSI of 29.1, experiencing an 11% decline in stock price over the past month, closing at $22.13 [8] Group 2: Company-Specific Developments - Oddity Tech's price target was lowered from $90 to $80 by Keybanc analyst Scott Schoenhaus [8] - Celsius Holdings announced a $300 million share repurchase authorization [8] - Calavo Growers will see a leadership change with Lee E. Cole retiring as CEO, effective December 8, 2025, and B. John Lindeman succeeding him [8]

Core Points - Lee E. Cole will retire as President and CEO of Calavo Growers, effective December 8, 2025, after four decades of leadership [1] - B. John Lindeman, former CFO and current Board member, has been appointed as the new President and CEO [1][2] Leadership Transition - Kathleen Holmgren, Chair of the Board, expressed gratitude for Mr. Cole's contributions and leadership during his tenure [2] - Mr. Cole highlighted his pride in the company's achievements and confidence in Mr. Lindeman's leadership for future success [2] - Mr. Lindeman emphasized his commitment to driving growth and creating sustainable value for shareholders [2] Background of New CEO - Mr. Lindeman previously served as CEO of Hydrofarm Holdings Group and held various leadership roles in finance and investment banking [2][3] - He is a Chartered Financial Analyst and holds a Bachelor of Science in business administration [3] Strategic Review - Calavo Growers is currently evaluating strategic alternatives following a non-binding acquisition proposal received on June 11, 2025 [4] - The review process is ongoing and may or may not lead to a transaction [4] Company Overview - Calavo Growers, Inc. is a global leader in the processing and distribution of avocados, tomatoes, papayas, and guacamole [5] - The company was founded in 1924 and has a strong culture of innovation and sustainable practices [5] - Calavo serves various markets including retail grocery, foodservice, and wholesalers worldwide [5]

Core Insights - The consumer staples sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Company Summaries - **Tootsie Roll Industries Inc (NYSE:TR)**: Reported Q3 earnings of 49 cents per share, an increase from 45 cents year-over-year. The stock has declined approximately 14% in the past five days, with a 52-week low of $28.32. Current RSI is 28.8, and the stock closed at $36.05, up 1.9% [8] - **National Beverage Corp (NASDAQ:FIZZ)**: Experienced disappointing quarterly sales, with a stock decline of around 8% over the past month and a 52-week low of $33.72. The current RSI is 21.4, and shares closed at $33.75, down 3.1% [8] - **Calavo Growers Inc (NASDAQ:CVGW)**: Reported weaker-than-expected quarterly results, with a stock decline of about 10% over the past month and a 52-week low of $21.46. The current RSI is 25.6, and shares closed at $23.21, down 0.5% [8]

Core Insights - The consumer staples sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Company Summaries - **Tootsie Roll Industries Inc (NYSE:TR)**: Reported Q3 earnings of 49 cents per share, an increase from 45 cents year-over-year. The stock has declined approximately 14% in the past five days, with a 52-week low of $28.32. Current RSI is 28.8, and the stock closed at $36.05, up 1.9% [8] - **National Beverage Corp (NASDAQ:FIZZ)**: Experienced disappointing quarterly sales, with a stock decline of around 8% over the past month and a 52-week low of $33.72. The current RSI is 21.4, and shares closed at $33.75, down 3.1% [8] - **Calavo Growers Inc (NASDAQ:CVGW)**: Reported weaker-than-expected quarterly results, with a stock drop of about 10% in the last month and a 52-week low of $21.46. The RSI stands at 25.6, and shares closed at $23.21, down 0.5% [8]

Core Insights - Heartland Advisors reported a 10.04% gain for the Heartland Value Fund in Q3 2025, while the Russell 2000® Value Index returned 12.60% during the same period [1] Company Overview - Calavo Growers, Inc. (NASDAQ:CVGW) is a prominent distributor of avocados and other perishable foods, with a market capitalization of $445.798 million as of October 10, 2025 [2] - The stock of Calavo Growers, Inc. experienced a one-month return of -9.03% and a 52-week decline of 11.17% [2] Investment Strategy - Heartland Value Fund began accumulating shares of Calavo Growers, Inc. in early 2024 after identifying an improving outlook through research calls, despite the company undergoing a management transition at that time [3]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides an overview of Calavo Growers' financial performance for Q3 and the nine-month period ended July 31, 2025, highlighting key operational and financial metrics [Third Quarter 2025 Highlights](index=1&type=section&id=Third%20Quarter%202025%20Highlights) Calavo Growers reported a slight decrease in total net sales for Q3 2025, primarily due to a decline in the Fresh segment, which was significantly impacted by a temporary FDA detention hold on avocado imports and lower selling prices, while the Prepared segment showed strong growth in sales and gross profit, and adjusted net income and EBITDA increased Third Quarter 2025 Key Metrics | Metric | Q3 2025 (in millions) | Q3 2024 (in millions) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Total Net Sales | $178.8 | $179.6 | -0.4% | | Fresh Segment Sales | $155.9 | - | -5% | | Prepared Segment Sales | $22.9 | - | +40% | | Gross Profit | $18.2 | - | -9% | | Adjusted Net Income | $10.2 | $10.0 | +2% | | Adjusted Net Income Per Diluted Share | $0.57 | $0.56 | +1.8% | | Adjusted EBITDA | $15.1 | $12.9 | +17.1% | - Fresh segment results reflected an **8% decrease in cartons sold**, driven by declines in both avocado and tomato carton sales[9](index=9&type=chunk) - Gross profit included approximately **$4.2 million of discrete costs** associated with a temporary Food and Drug Administration ("FDA") detention hold on certain avocado imports from Mexico, which resulted in third-party inspection and testing costs, incremental logistics and handling expenses, and inventory write-downs[5](index=5&type=chunk)[9](index=9&type=chunk) - Prepared segment net sales increased primarily due to a **35% increase in sales volume**[9](index=9&type=chunk) [Nine-Month Period Ended July 31, 2025 Highlights](index=2&type=section&id=Nine-Month%20Period%20Ended%20July%2031%2C%202025%20Highlights) For the nine-month period, Calavo Growers achieved a 7% increase in total net sales, with both Fresh and Prepared segments contributing to growth, and net income and adjusted metrics saw significant improvements, partly due to reduced SG&A expenses and strong Prepared segment performance, despite the Fresh segment facing challenges including the FDA hold Nine-Month Period 2025 Key Metrics | Metric | 9M 2025 (in millions) | 9M 2024 (in millions) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Total Net Sales | $523.8 | $491.6 | +7% | | Fresh Segment Sales | $470.3 | - | +6% | | Prepared Segment Sales | $53.5 | - | +10% | | Gross Profit | $52.0 | $51.5 | +1% | | SG&A Expenses | $29.8 | $36.9 | -19% | | Net Income from Continuing Operations | $16.1 | $9.3 | +73.1% | | Diluted EPS from Continuing Operations | $0.89 | $0.52 | +71.2% | | Adjusted Net Income | $23.8 | $19.2 | +24% | | Adjusted Net Income Per Diluted Share | $1.33 | $1.08 | +23.1% | | Adjusted EBITDA | $35.7 | $29.9 | +19.4% | - Fresh segment results reflected a decline in avocado and tomato sales, together with approximately **$4.2 million of discrete costs** in the third quarter related to a temporary FDA detention hold on certain avocado imports from Mexico[9](index=9&type=chunk) - Prepared segment sales and profitability increased meaningfully, driven by higher volumes, lower fruit input costs, and improved operating efficiencies[9](index=9&type=chunk) - SG&A expenses declined **19%** compared to the prior year period, reflecting a reduction in professional and consulting fees (including reduced FCPA investigation-related legal expenses), a reduction in compensation expenses reflecting lower headcount and severance costs and a decrease in stock-based compensation expenses[10](index=10&type=chunk) [Management Commentary](index=3&type=section&id=Management%20Commentary) Management discusses Q3 operational challenges and successes, including the FDA hold resolution, avocado pricing, Prepared segment growth, and a significant legal development in Mexico [Management Commentary](index=3&type=section&id=Management%20Commentary) CEO Lee Cole acknowledged Q3 challenges in the Fresh segment due to the temporary FDA detention hold (now resolved) and lower avocado selling prices, highlighting the outstanding growth and higher volumes in the Prepared segment, and also noted a significant legal milestone in Mexico regarding maquila status, strengthening the company's position for IVA recovery and defense against a 2013 assessment, and projected strong fiscal 2026 sales for the Prepared segment - Fresh segment results were adversely affected by a temporary FDA detention hold tied to trace detection of Imazalil in a single shipment from the Mexican facility, which required enhanced testing and slowed cross-border movement[11](index=11&type=chunk) - Third quarter avocado selling prices were significantly lower sequentially versus the second quarter as avocado supply from Mexico, California, and Peru converged[11](index=11&type=chunk) - The Prepared segment delivered **outstanding growth with higher volumes**[11](index=11&type=chunk) - The FDA matter has been resolved as of September 2, 2025, and is believed to be a non-recurring event[11](index=11&type=chunk) - A Federal Court in Mexico formally recognized Calavo de Mexico as a maquila, strengthening the company's position to recover value-added tax ("IVA") receivables and bolstering its defense in the 2013 assessment[11](index=11&type=chunk) - The Prepared segment projects sales of approximately **$115 million for fiscal 2026**, with July sales annualizing to over $100 million on a monthly run-rate basis[11](index=11&type=chunk) [Consolidated Financial Review for Continuing Operations](index=3&type=section&id=Consolidated%20Financial%20Review%20for%20Continuing%20Operations) This section details Calavo Growers' financial performance for the third quarter and nine-month period, covering overall financials, segment-specific results, and liquidity [Third Quarter 2025 Financial Performance](index=3&type=section&id=Third%20Quarter%202025%20Consolidated%20Financial%20Review%20for%20Continuing%20Operations) Calavo Growers' third quarter saw a slight dip in total net sales and gross profit, primarily due to Fresh segment challenges and FDA-related costs, however, SG&A expenses decreased significantly, and adjusted net income showed a modest increase [Overall Financials](index=3&type=section&id=Overall%20Financials_Q3_2025) This subsection provides a summary of Calavo Growers' consolidated net sales, gross profit, operating expenses, and net income for the third quarter of 2025 Third Quarter 2025 Overall Financials | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Net Sales | $178,822 | $179,596 | -0.4% | | Gross Profit | $18,198 | $20,093 | -9.4% | | SG&A Expenses | $9,232 | $10,510 | -12.2% | | Net Income (GAAP) | $4,714 | $5,395 | -12.6% | | Diluted EPS (GAAP) | $0.26 | $0.30 | -13.3% | | Adjusted Net Income (Non-GAAP) | $10,156 | $10,005 | +1.5% | | Adjusted Diluted EPS (Non-GAAP) | $0.57 | $0.56 | +1.8% | | Adjusted EBITDA (Non-GAAP) | $15,051 | $12,909 | +16.6% | - SG&A expenses declined **12%** from the prior year quarter, primarily due to a reduction in professional and consulting fees (including lower FCPA investigation-related legal expenses), partially offset by increased bonus expense[14](index=14&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance_Q3_2025) This subsection details the net sales and gross profit performance of Calavo Growers' Fresh and Prepared segments for the third quarter of 2025 Third Quarter 2025 Segment Performance | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | Change (%) | | :--------------------- | :--------------------- | :--------------------- | :--------- | | **Fresh Segment:** | | | | | Net Sales | $155,851 | $163,218 | -4.5% | | Gross Profit | $12,427 | $18,175 | -31.6% | | **Prepared Segment:** | | | | | Net Sales | $22,971 | $16,378 | +40.2% | | Gross Profit | $5,771 | $1,918 | +200.9% | - Fresh segment sales were down **5%** year over year, reflecting an **8% decrease** in overall cartons sold, including lower avocado volumes (down 5%) and tomato volumes (down 27%)[16](index=16&type=chunk) - Fresh segment gross profit was down **32%**, primarily due to lower avocado volumes and approximately **$4.2 million of discrete costs** associated with a temporary FDA detention hold on certain avocado imports from Mexico[16](index=16&type=chunk) - Prepared segment sales were up **40%**, driven primarily by volume growth of approximately **35%**, complemented by modestly higher average selling prices, reflecting strong demand and the benefits of scaling programs with customers[16](index=16&type=chunk) - Prepared segment gross profit increased to **$5.8 million (up 201%)**, primarily reflecting improved operational efficiency and stronger cost management[16](index=16&type=chunk) [Nine-Month Period Ended July 31, 2025 Financial Performance](index=4&type=section&id=Nine-Month%202025%20Consolidated%20Financial%20Review%20for%20Continuing%20Operations) For the nine-month period, Calavo Growers reported a 7% increase in total net sales, with gross profit seeing a modest increase, while SG&A expenses significantly decreased, and net income and adjusted net income both showed substantial year-over-year improvements, driven by strong Prepared segment performance and cost management [Overall Financials](index=4&type=section&id=Overall%20Financials_9M_2025) This subsection provides a summary of Calavo Growers' consolidated net sales, gross profit, operating expenses, and net income for the nine-month period ended July 31, 2025 Nine-Month Period 2025 Overall Financials | Metric | 9M 2025 (in thousands) | 9M 2024 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Net Sales | $523,753 | $491,585 | +6.5% | | Gross Profit | $52,015 | $51,514 | +1.0% | | SG&A Expenses | $29,822 | $36,993 | -19.4% | | Net Income (GAAP) | $15,979 | $9,281 | +72.2% | | Diluted EPS (GAAP) | $0.89 | $0.52 | +71.2% | | Adjusted Net Income (Non-GAAP) | $23,807 | $19,231 | +23.8% | | Adjusted Diluted EPS (Non-GAAP) | $1.33 | $1.08 | +23.1% | | Adjusted EBITDA (Non-GAAP) | $35,733 | $29,946 | +19.3% | - SG&A expenses for the nine-month period were down **19%** from the prior year period, primarily due to a reduction in professional and consulting fees (including reduced FCPA investigation-related legal expenses), a reduction in compensation expenses reflecting lower headcount and severance costs, and a decrease in stock-based compensation expenses[19](index=19&type=chunk) [Segment Performance](index=4&type=section&id=Segment%20Performance_9M_2025) This subsection details the net sales and gross profit performance of Calavo Growers' Fresh and Prepared segments for the nine-month period ended July 31, 2025 Nine-Month Period 2025 Segment Performance | Metric | 9M 2025 Fresh (in thousands) | 9M 2025 Prepared (in thousands) | 9M 2024 Fresh (in thousands) | 9M 2024 Prepared (in thousands) | | :-------------------- | :----------------------------- | :------------------------------ | :----------------------------- | :------------------------------ | | Net Sales | $470,307 | $53,446 | $442,999 | $48,586 | | Cost of sales | $431,690 | $40,048 | $402,041 | $38,030 | | Gross profit | $38,617 | $13,398 | $40,958 | $10,556 | - Fresh segment sales were up **6%**, driven by higher average avocado pricing year over year, partially offset by a decline in avocado and tomato sales[23](index=23&type=chunk) - Fresh segment gross profit was down **6%** from the prior year period, primarily reflecting lower avocado and tomato volumes and approximately **$4.2 million of discrete costs** associated with a temporary FDA detention hold on certain avocado imports from Mexico in the third quarter[23](index=23&type=chunk) - Prepared segment sales were up **10%**, reflecting higher volumes and expanded programs with key customers[23](index=23&type=chunk) - Prepared segment gross profit increased **27% to $13.4 million**, reflecting higher sales volumes, lower fruit input costs compared to last year, and improved operating efficiencies[23](index=23&type=chunk) [Balance Sheet and Liquidity](index=4&type=section&id=Balance%20Sheet%20and%20Liquidity) As of July 31, 2025, Calavo Growers maintained a strong liquidity position with $63.8 million in cash and cash equivalents and $114.3 million in available liquidity, with no borrowings under its revolving credit facility - Cash and cash equivalents were **$63.8 million** as of July 31, 2025[21](index=21&type=chunk) - Available liquidity was **$114.3 million**, defined as cash and cash equivalents plus available borrowing capacity under the revolving credit facility[21](index=21&type=chunk) - The company had **no borrowings** under its credit facility and total debt of **$5.1 million** consisting of other long-term obligations and finance leases as of July 31, 2025[21](index=21&type=chunk) [Non-GAAP Financial Measures](index=1&type=section&id=Non-GAAP%20Financial%20Measures) This section defines Calavo Growers' non-GAAP financial measures, explains their rationale, and provides detailed reconciliations to GAAP equivalents [Definition and Rationale](index=1&type=section&id=Definition%20and%20Rationale) Calavo Growers uses non-GAAP measures such as EBITDA, adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per diluted share to provide investors with a clearer view of core operating performance and to help isolate unusual items, excluding specific items like interest, taxes, depreciation, amortization, stock-based compensation, acquisition/restructuring costs, litigation, foreign currency, asset impairments, tariffs, and one-time items, with the calculation of Adjusted Net Income modified in Q3 2025 to add back stock-based compensation expense for enhanced comparability - Non-GAAP measures include EBITDA, adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per diluted share[22](index=22&type=chunk)[24](index=24&type=chunk) - EBITDA is defined as net income (loss) from continuing operations attributable to Calavo Growers, Inc. excluding interest income and expense, income tax (benefit) provision, depreciation and amortization, and stock-based compensation expense[22](index=22&type=chunk) - Adjusted EBITDA includes further adjustments for acquisition-related costs, restructuring-related costs, certain litigation/internal investigation costs, foreign currency gain (loss), asset impairments, discrete tariff or other tax charges, and one-time items[22](index=22&type=chunk) - Adjusted net income (loss) excludes acquisition-related costs, restructuring-related costs, certain litigation/internal investigation costs, foreign currency loss (gain), asset impairments, discrete tariff or other tax charges, and one-time items[24](index=24&type=chunk) - During the third quarter of fiscal 2025, the calculation of Adjusted Net Income was modified to add back stock-based compensation expense to enhance comparability with industry peers and provide a clearer representation of core operating performance[4](index=4&type=chunk)[35](index=35&type=chunk) - Management believes these measures are useful to investors because they help isolate unusual items not indicative of ongoing operations and reflect how management monitors operating performance and allocates resources[25](index=25&type=chunk) [Reconciliation of Adjusted Net Income](index=10&type=section&id=RECONCILIATION%20OF%20ADJUSTED%20NET%20INCOME%20AND%20ADJUSTED%20NET%20INCOME%20PER%20DILUTED%20SHARE%20%28UNAUDITED%29) This section provides a detailed reconciliation of GAAP net income from continuing operations to adjusted net income for both the three-month and nine-month periods ended July 31, 2025 and 2024, highlighting specific non-GAAP adjustments Reconciliation of Adjusted Net Income and Adjusted Net Income Per Diluted Share | Adjustment Category | Q3 2025 (in thousands) | Q3 2024 (in thousands) | 9M 2025 (in thousands) | 9M 2024 (in thousands) | | :---------------------------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income from continuing operations attributable to Calavo Growers, Inc. | $4,714 | $5,395 | $15,979 | $9,281 | | Restructure costs | — | — | — | $1,037 | | Expenses related to Mexican tax matters | $307 | $225 | $858 | $810 | | Professional fees related to internal investigation and legal settlement | $42 | $1,395 | $967 | $6,431 | | Foreign currency loss (gain) | $2,483 | $4,203 | $2,488 | $2,799 | | Tariffs | $11 | — | $951 | — | | Stock-Based Compensation | $280 | $388 | $875 | $1,736 | | FDA Regulatory Hold–Related Charges | $4,231 | — | $4,231 | — | | Tax impact of adjustments | $(1,912) | $(1,601) | $(2,542) | $(2,863) | | **Adjusted net income from continuing operations** | **$10,156** | **$10,005** | **$23,807** | **$19,231** | | Diluted EPS from continuing operations (GAAP) | $0.26 | $0.30 | $0.89 | $0.52 | | **Adjusted net income from continuing operations per diluted share** | **$0.57** | **$0.56** | **$1.33** | **$1.08** | - FDA Regulatory Hold–Related Charges of **$4.231 million** were incurred in Q3 and 9M 2025, representing third-party inspection and testing costs, incremental logistics/handling expenses, and inventory write-downs due to a temporary FDA detention hold on certain avocado imports from Mexico[36](index=36&type=chunk)[44](index=44&type=chunk) - Professional fees related to internal investigation and legal settlement significantly decreased from **$1.395 million in Q3 2024 to $42 thousand in Q3 2025**, and from **$6.431 million in 9M 2024 to $967 thousand in 9M 2025**, primarily due to reduced FCPA investigation-related legal expenses[36](index=36&type=chunk)[38](index=38&type=chunk) [Reconciliation of EBITDA and Adjusted EBITDA](index=11&type=section&id=RECONCILIATION%20OF%20EBITDA%20AND%20ADJUSTED%20EBITDA%20%28UNAUDITED%29) This section provides a detailed reconciliation of GAAP net income from continuing operations to EBITDA and adjusted EBITDA for both the three-month and nine-month periods ended July 31, 2025 and 2024, outlining the specific adjustments made Reconciliation of EBITDA and Adjusted EBITDA | Adjustment Category | Q3 2025 (in thousands) | Q3 2024 (in thousands) | 9M 2025 (in thousands) | 9M 2024 (in thousands) | | :---------------------------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income from continuing operations attributable to Calavo Growers, Inc. | $4,714 | $5,395 | $15,979 | $9,281 | | Interest Income | $(879) | $(100) | $(2,486) | $(340) | | Interest Expense | $199 | $833 | $616 | $2,619 | | Provision for Income Taxes | $1,807 | $(1,441) | $5,598 | $(478) | | Depreciation and Amortization | $1,856 | $2,011 | $5,656 | $6,121 | | Stock-Based Compensation | $280 | $388 | $875 | $1,736 | | **EBITDA from continuing operations** | **$7,977** | **$7,086** | **$26,238** | **$18,939** | | Restructure costs | — | — | — | $967 | | Expenses related to Mexican tax matters | $307 | $225 | $858 | $810 | | Professional fees related to internal investigation and legal settlement | $42 | $1,395 | $967 | $6,431 | | Foreign currency loss (gain) | $2,483 | $4,203 | $2,488 | $2,799 | | Tariffs | $11 | — | $951 | — | | FDA Regulatory Hold–Related Charges | $4,231 | — | $4,231 | — | | **Adjusted EBITDA from continuing operations** | **$15,051** | **$12,909** | **$35,733** | **$29,946** | - EBITDA from continuing operations increased by **12.6% in Q3 2025** and **38.5% in 9M 2025** compared to the prior year periods[43](index=43&type=chunk) - Adjusted EBITDA from continuing operations increased by **16.6% in Q3 2025** and **19.3% in 9M 2025** compared to the prior year periods[43](index=43&type=chunk) [Company Information](index=5&type=section&id=Company%20Information) This section provides an overview of Calavo Growers, Inc., its business operations, and a safe harbor statement regarding forward-looking information and associated risks [About Calavo Growers, Inc.](index=5&type=section&id=About%20Calavo%20Growers%2C%20Inc.) Calavo Growers, Inc. is a global leader in processing and distributing avocados, tomatoes, papayas, and guacamole, operating under its trusted brand name, sub-brands, and private labels, founded in 1924, the company emphasizes innovation, sustainable practices, and market growth, serving a wide range of customers worldwide from its headquarters in Santa Paula, California - Calavo Growers, Inc. is a global leader in the processing and distribution of avocados, tomatoes, papayas and guacamole[27](index=27&type=chunk) - Calavo products are sold under the trusted Calavo brand name, proprietary sub-brands, private label and store brands[27](index=27&type=chunk) - Founded in 1924, Calavo has a rich culture of innovation, sustainable practices and market growth[27](index=27&type=chunk) - The Company serves retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers worldwide[27](index=27&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) This section contains forward-looking statements regarding future events and financial results, which are subject to various risks, uncertainties, and assumptions, cautioning that actual results may differ materially from projections due to factors such as management team dynamics, weather, market price sensitivity, regulatory changes, supply chain disruptions, acquisitions, cybersecurity risks, dependence on customers/personnel, labor issues, competition, recalls, environmental regulations, and international business risks, including tax disputes and regulatory scrutiny like FDA detention holds - The press release contains forward-looking statements relating to future events and results that involve risks, uncertainties, and assumptions[28](index=28&type=chunk) - Risks and uncertainties that may cause actual results to differ materially include, but are not limited to, management team ability, weather impact, seasonality, market price sensitivity of agricultural products, regulatory changes (USDA-APHIS, SADER), supply chain disruptions, acquisition risks, cybersecurity, dependence on large customers and key personnel, wage inflation, labor disputes, competitive pressures, recalls, environmental regulations, and international business risks[29](index=29&type=chunk) - Specific risks mentioned include the resolution of pending internal and external investigations, legal claims and tax disputes (e.g., SAT assessment), and risks related to enhanced regulatory scrutiny or inspection protocols, including detention holds by the FDA[29](index=29&type=chunk) [Unaudited Financial Statements](index=7&type=section&id=Unaudited%20Financial%20Statements) This section presents Calavo Growers' unaudited condensed consolidated balance sheets, statements of operations, and segment-specific net sales and gross profit [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20%28UNAUDITED%29) This section presents the unaudited condensed consolidated balance sheets of Calavo Growers, Inc. as of July 31, 2025, and October 31, 2024, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets | Metric (in thousands) | July 31, 2025 | October 31, 2024 | Change | | :-------------------------------- | :------------ | :--------------- | :----- | | **Assets:** | | | | | Cash and cash equivalents | $63,754 | $57,031 | +$6,723 | | Total current assets | $159,112 | $158,579 | +$533 | | Total assets | $301,249 | $301,119 | +$130 | | **Liabilities:** | | | | | Total current liabilities | $69,201 | $73,205 | -$4,004 | | Total long-term liabilities | $24,048 | $26,138 | -$2,090 | | **Shareholders' Equity:** | | | | | Total Calavo Growers, Inc shareholders' equity | $206,424 | $200,332 | +$6,092 | | Total shareholders' equity | $208,000 | $201,776 | +$6,224 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20%28UNAUDITED%29) This section provides the unaudited condensed consolidated statements of operations for the three-month and nine-month periods ended July 31, 2025 and 2024, detailing net sales, cost of sales, gross profit, operating expenses, and net income (loss) Condensed Consolidated Statements of Operations | Metric (in thousands) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :---------------------------------------------------- | :------ | :------ | :------ | :------ | | Net sales | $178,822 | $179,596 | $523,753 | $491,585 | | Cost of sales | $160,624 | $159,503 | $471,738 | $440,071 | | Gross profit | $18,198 | $20,093 | $52,015 | $51,514 | | Selling, general and administrative | $9,232 | $10,510 | $29,822 | $36,993 | | Operating income | $8,659 | $9,358 | $21,335 | $13,711 | | Net income from continuing operations | $4,736 | $5,365 | $16,111 | $9,298 | | Net income (loss) attributable to Calavo Growers, Inc. | $4,714 | $(732) | $15,979 | $(937) | | Diluted EPS from Continuing Operations | $0.26 | $0.30 | $0.89 | $0.52 | [Net Sales and Gross Profit by Business Segment](index=9&type=section&id=NET%20SALES%20AND%20GROSS%20PROFIT%20BY%20BUSINESS%20SEGMENT%20%28UNAUDITED%29) This section presents the unaudited net sales and gross profit broken down by the Fresh and Prepared business segments for the three-month and nine-month periods ended July 31, 2025 and 2024 Net Sales and Gross Profit by Business Segment | Metric (in thousands) | Q3 2025 Fresh | Q3 2025 Prepared | Q3 2024 Fresh | Q3 2024 Prepared | 9M 2025 Fresh | 9M 2025 Prepared | 9M 2024 Fresh | 9M 2024 Prepared | | :-------------------- | :------------ | :--------------- | :------------ | :--------------- | :------------ | :--------------- | :------------ | :--------------- | | Net sales | $155,851 | $22,971 | $163,218 | $16,378 | $470,307 | $53,446 | $442,999 | $48,586 | | Cost of sales | $143,424 | $17,200 | $145,043 | $14,460 | $431,690 | $40,048 | $402,041 | $38,030 | | Gross profit | $12,427 | $5,771 | $18,175 | $1,918 | $38,617 | $13,398 | $40,958 | $10,556 |

[FORWARD-LOOKING STATEMENTS](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines that the Form 10-Q contains forward-looking statements, subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements subject to **risks, uncertainties, and assumptions**, based on current expectations and not guarantees of future performance[5](index=5&type=chunk) - Factors that may cause actual results to differ materially include **projections of revenue, gross profit, expenses, and earnings per share**, impact of acquisitions, macroeconomic trends, legal matters, and supply chain disruptions[8](index=8&type=chunk) - The company does not undertake any obligation to update or revise forward-looking statements, except as required by applicable securities laws[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%3A) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and shareholders' equity, with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's total assets remained stable at $301.2 million as of July 31, 2025, compared to $301.1 million at October 31, 2024, with improved working capital and increased shareholders' equity | Metric | July 31, 2025 | October 31, 2024 | Change (2025 vs 2024) | | :-------------------------------- | :------------ | :--------------- | :-------------------- | | **Assets** | | | | | Cash and cash equivalents | $63,754 | $57,031 | +$6,723 | | Total current assets | $159,112 | $158,579 | +$533 | | Property, plant, and equipment, net | $50,603 | $54,200 | -$3,597 | | Total assets | $301,249 | $301,119 | +$130 | | **Liabilities** | | | | | Payable to growers | $31,849 | $18,377 | +$13,472 | | Accrued expenses | $10,459 | $28,149 | -$17,690 | | Income tax payable | $1,721 | $2,767 | -$1,046 | | Total current liabilities | $69,201 | $73,205 | -$4,004 | | Total long-term liabilities | $24,048 | $26,138 | -$2,090 | | **Shareholders' Equity** | | | | | Total shareholders' equity | $208,000 | $201,776 | +$6,224 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended July 31, 2025, net sales remained stable, but gross profit and operating income decreased, while net income significantly improved due to the absence of discontinued operations, and for the nine months, net sales, gross profit, and net income all showed positive growth | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Net sales | $178,822 | $179,596 | -0.4% | $523,753 | $491,585 | +6.5% | | Gross profit | $18,198 | $20,093 | -9.4% | $52,015 | $51,514 | +1.0% | | Operating income | $8,659 | $9,358 | -7.5% | $21,335 | $13,711 | +55.6% | | Net income (loss) from discontinued operations | — | $(6,127) | N/A | — | $(10,218) | N/A | | Net income (loss) attributable to Calavo Growers, Inc. | $4,714 | $(732) | N/A | $15,979 | $(937) | N/A | | Basic EPS (Continuing Operations) | $0.26 | $0.30 | -13.3% | $0.90 | $0.52 | +73.1% | | Basic EPS (Net income (loss)) | $0.26 | $(0.04) | N/A | $0.90 | $(0.05) | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended July 31, 2025, net cash provided by operating activities increased significantly to $19.2 million, while cash used in investing activities decreased and financing activities remained stable | Metric | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Net income (loss) | $16,111 | $(920) | N/A | | Net cash provided by operating activities | $19,234 | $13,583 | +41.6% | | Net cash used in investing activities | $(1,066) | $(2,519) | -57.7% | | Net cash (used in) financing activities | $(11,445) | $(12,790) | -10.5% | | Net increase (decrease) in cash | $6,723 | $(1,726) | N/A | | Cash, cash equivalents, end of period | $63,754 | $1,126 | +5576.2% | [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Total shareholders' equity increased to $208.0 million by July 31, 2025, driven by net income, partially offset by dividend payments | Metric | Balance, October 31, 2024 | Balance, July 31, 2025 | Change | | :-------------------------------------- | :------------------------ | :--------------------- | :------- | | Common Stock (Amount) | $18 | $18 | $0 | | Additional Paid-in Capital | $177,973 | $178,803 | +$830 | | Retained Earnings | $22,341 | $27,603 | +$5,262 | | Noncontrolling Interest | $1,444 | $1,576 | +$132 | | Total Shareholders' Equity | $201,776 | $208,000 | +$6,224 | - **Net income attributable to Calavo Growers, Inc.** for the nine months ended July 31, 2025, was **$15,979 thousand**, contributing significantly to the increase in retained earnings[15](index=15&type=chunk) - **Dividends declared to shareholders** for the nine months ended July 31, 2025, totaled **$10,717 thousand**[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on business operations, segment reporting, inventory, related party transactions, significant events, and tax matters [1. Description of the business](index=10&type=section&id=1.%20Description%20of%20the%20business) Calavo Growers, Inc. is a global leader in sourcing, packing, and distributing fresh avocados, tomatoes, papayas, and processing guacamole and other avocado products - Calavo is a global leader in **fresh avocados, tomatoes, papayas, and processed avocado products** (guacamole)[17](index=17&type=chunk) - The "Grown" segment was renamed "**Fresh**" in Q1 fiscal 2025 to better reflect activities, with no change to its composition or financial results[18](index=18&type=chunk) [2. Information regarding our operations in different segments](index=12&type=section&id=2.%20Information%20regarding%20our%20operations%20in%20different%20segments) Calavo operates in Fresh and Prepared segments, with Fresh sales increasing 6.2% and Prepared sales increasing 10.0% for the nine months ended July 31, 2025 - The "Grown" segment was renamed "**Fresh**" in Q1 fiscal 2025, comprising fresh avocados, tomatoes, and papayas, while the "**Prepared**" segment includes guacamole and avocado pulp[23](index=23&type=chunk) Net Sales by Segment | Segment | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Fresh | $155,851 | $163,218 | -4.5% | $470,307 | $442,999 | +6.2% | | Prepared | $22,971 | $16,378 | +40.2% | $53,446 | $48,586 | +10.0% | | Total | $178,822 | $179,596 | -0.4% | $523,753 | $491,585 | +6.5% | Gross Profit by Segment | Segment | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Fresh | $12,427 | $18,175 | -31.6% | $38,617 | $40,958 | -5.7% | | Prepared | $5,771 | $1,918 | +200.9% | $13,398 | $10,556 | +26.9% | | Total | $18,198 | $20,093 | -9.4% | $52,015 | $51,514 | +1.0% | [3. Inventories](index=13&type=section&id=3.%20Inventories) Total inventories decreased to $30.3 million by July 31, 2025, with a significant increase in inventory reserves due to slow-moving items and market factors | Inventory Type | July 31, 2025 | October 31, 2024 | Change | | :---------------------- | :------------ | :--------------- | :----- | | Fresh fruit | $16,233 | $20,002 | -$3,769 | | Packing supplies and ingredients | $6,932 | $6,936 | -$4 | | Finished prepared foods | $7,163 | $7,219 | -$56 | | Total | $30,328 | $34,157 | -$3,829 | - **Inventory reserves increased to $2.6 million** as of July 31, 2025, from $0.4 million at October 31, 2024, reflecting higher slow-moving inventories and market factors, including the FDA detention hold on Mexican avocados[26](index=26&type=chunk)[27](index=27&type=chunk) [4. Related party transactions](index=15&type=section&id=4.%20Related%20party%20transactions) Calavo engages in various related party transactions, including avocado procurement from affiliated entities and advances with unconsolidated entities - Avocados procured from entities owned or controlled by Board members totaled **$2.7 million (3 months) and $4.3 million (9 months)** for July 31, 2025[28](index=28&type=chunk) - Avocados procured from entities affiliated with the CEO totaled **$2.5 million (3 months) and $6 million (9 months)** for July 31, 2025[29](index=29&type=chunk) - Calavo has a **50% ownership in Agricola Don Memo**, with outstanding advances of **$8.2 million** as of July 31, 2025, and incurred **$10.6 million in cost of sales** for the nine months ended July 31, 2025[31](index=31&type=chunk) - Calavo had grower advances due from Belher totaling **$4.3 million** as of July 31, 2025, and incurred **$16 million in cost of sales** for the nine months ended July 31, 2025[32](index=32&type=chunk)[34](index=34&type=chunk) - Avocados de Jalisco, **83% owned by Calavo**, purchased approximately **$3 million of avocados** from its partners for the nine months ended July 31, 2025[35](index=35&type=chunk) [5. Other assets](index=17&type=section&id=5.%20Other%20assets) Other assets primarily consist of Mexican IVA taxes receivable, net, which increased to $53.9 million as of July 31, 2025 | Asset Type | July 31, 2025 | October 31, 2024 | Change | | :-------------------------------------- | :------------ | :--------------- | :----- | | Mexican IVA taxes receivable, net | $53,854 | $48,739 | +$5,115 | | Infrastructure advances | — | $467 | -$467 | | Other | $581 | $710 | -$129 | | Total | $54,435 | $49,916 | +$4,519 | [6. Other events](index=17&type=section&id=6.%20Other%20events) This note details significant events including quarterly dividends, an FDA detention hold, FCPA inquiry closure, new tax law, ongoing Mexican tax litigation, and a lease contingency - Calavo paid quarterly dividends of **$0.20 per share** on January 31, April 29, and July 28, 2025, each totaling **$3.6 million**, with another $0.20 dividend declared for October 31, 2025[37](index=37&type=chunk) - In July 2025, the FDA placed Calavo de México (CDM) on a Red List Detention Hold due to trace levels of Imazalil, resulting in approximately **$4.2 million in incremental costs** (inspection, logistics, inventory write-downs), which was resolved in September 2025[38](index=38&type=chunk) - The U.S. Department of Justice closed its **Foreign Corrupt Practices Act (FCPA) inquiry** related to Mexican operations on September 2, 2025[43](index=43&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)** was enacted in July 2025, affecting corporate taxation, but its impacts did not materially affect the tax rate for the three and nine months ended July 31, 2025[44](index=44&type=chunk) - Calavo is appealing a 2013 Mexican tax assessment totaling approximately **$160 million USD** (including inflation and fines) and a **$6.3 million employee profit-sharing liability**, with a provision of **$11 million** recorded in Q3 fiscal 2021 for this matter[47](index=47&type=chunk)[52](index=52&type=chunk) - As a guarantor for assigned leases from the Fresh Cut business sale, Calavo has a maximum exposure of **$32.0 million** in undiscounted future minimum lease payments, plus **$13.3 million** in potential additional payments[54](index=54&type=chunk)[58](index=58&type=chunk) [7. Noncontrolling interest](index=22&type=section&id=7.%20Noncontrolling%20interest) Noncontrolling interest, primarily related to Avocados de Jalisco, increased to $1.576 million by July 31, 2025, reflecting net income attribution | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | | :---------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Noncontrolling interest, beginning | $1,554 | $1,439 | $1,444 | $1,392 | | Net income (loss) attributable to noncontrolling interest | $22 | $(30) | $132 | $17 | | Noncontrolling interest, ending | $1,576 | $1,409 | $1,576 | $1,409 | [8. Earnings per share](index=22&type=section&id=8.%20Earnings%20per%20share) Basic and diluted EPS from continuing operations for the nine months ended July 31, 2025, increased significantly to $0.90 from $0.52 | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income from continuing operations attributable to Calavo Growers, Inc. (Numerator) | $4,714 | $5,395 | $15,979 | $9,281 | | Weighted average shares - Basic (Denominator) | 17,853 | 17,801 | 17,842 | 17,800 | | Effect on dilutive securities – Restricted stock/units/options | 46 | 41 | 51 | 48 | | Basic EPS (Continuing Operations) | $0.26 | $0.30 | $0.90 | $0.52 | | Diluted EPS (Continuing Operations) | $0.26 | $0.30 | $0.89 | $0.52 | | Basic EPS (Net income (loss)) | $0.26 | $(0.04) | $0.90 | $(0.05) | | Diluted EPS (Net income (loss)) | $0.26 | $(0.04) | $0.89 | $(0.05) | [9. Mexican IVA taxes receivable](index=24&type=section&id=9.%20Mexican%20IVA%20taxes%20receivable) Mexican IVA taxes receivable, net, increased to $53.9 million, with ongoing efforts to recover VAT amounts and a recent favorable court ruling under appeal - CDM VAT receivables, net of provision, totaled **$53.9 million (1.0 billion Mexican pesos)** as of July 31, 2025, up from $48.7 million (976.0 million Mexican pesos) at October 31, 2024[64](index=64&type=chunk) - In Q2 fiscal 2025, the SAT refunded **36.7 million Mexican pesos (approx. $1.9 million USD)** in VAT relating to claims for March, April, and November 2019, secured directly from the tax authority[68](index=68&type=chunk) - In August 2025, the Fifth Collegiate Circuit Court ruled in favor of CDM, recognizing it as a maquila and directing the SAT to refund IVA balances for January-June 2013, though the SAT has appealed this to the Mexican Supreme Court[69](index=69&type=chunk) [10. Assets Held for Sale and Discontinued Operations](index=26&type=section&id=10.%20Assets%20Held%20for%20Sale%20and%20Discontinued%20Operations) The Fresh Cut business was sold in August 2024 for $83 million, resulting in a goodwill impairment charge and a net loss from discontinued operations - The **Fresh Cut business was sold in August 2024 for $83 million** and was classified as discontinued operations[70](index=70&type=chunk)[75](index=75&type=chunk) - A **$9.3 million goodwill impairment charge** was recorded in Q3 fiscal 2024 in connection with the sale[71](index=71&type=chunk) Discontinued Operations Financial Summary | Metric | 3 Months Ended July 31, 2024 | 9 Months Ended July 31, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | | Net sales | $88,586 | $258,958 | | Gross profit | $7,362 | $12,003 | | Operating loss | $(6,111) | $(10,173) | | Net loss from discontinued operations | $(6,127) | $(10,218) | [11. Sale of Fresh Cut Business](index=28&type=section&id=11.%20Sale%20of%20Fresh%20Cut%20Business) The Fresh Cut business was sold for $83 million in August 2024, leading to an amendment of the company's credit agreement - The Fresh Cut business and related real estate were sold for a total transaction value of **$83 million** on August 15, 2024[75](index=75&type=chunk) - The sale included **$52.0 million for business assets** and **$31.0 million for real estate**[76](index=76&type=chunk) - The credit agreement was amended to reduce revolving commitments from **$90.0 million to $75.0 million**, aligning with the asset base excluding the Fresh Cut business[77](index=77&type=chunk) [12. Subsequent Events](index=28&type=section&id=12.%20Subsequent%20Events) Subsequent events include a favorable court ruling on IVA refunds (under appeal) and the declaration of a $0.20 per share quarterly cash dividend - In August 2025, the Fifth Collegiate Circuit Court ruled recognizing CDM as a maquila and directing the SAT to refund IVA balances for January-June 2013, though the SAT appealed this decision[78](index=78&type=chunk) - A quarterly cash dividend of **$0.20 per share** was declared, payable on October 31, 2025, to shareholders of record on September 30, 2025[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, liquidity, and capital resources, highlighting recent developments, market trends, and operational results [Recent Developments](index=30&type=section&id=Recent%20Developments) Recent developments include quarterly dividends, closure of the FCPA inquiry, and positive progress in Mexican tax matters with a VAT refund and favorable court ruling - A quarterly cash dividend of **$0.20 per share** was paid on July 28, 2025, and another declared for October 31, 2025[81](index=81&type=chunk) - The U.S. Department of Justice closed its **Foreign Corrupt Practices Act (FCPA) inquiry** related to Calavo's Mexican operations on September 2, 2025[82](index=82&type=chunk) - Calavo received a **$1.9 million VAT refund** from the SAT in Q2 fiscal 2025 and a favorable August 2025 court ruling recognizing CDM as a maquila for IVA refunds, which the SAT has appealed[83](index=83&type=chunk)[84](index=84&type=chunk) [Market Trends and Uncertainties](index=30&type=section&id=Market%20Trends%20and%20Uncertainties) Calavo faces macroeconomic challenges, a temporary FDA detention hold, ongoing U.S.-Mexico trade policy uncertainty, and supply chain disruption risks - Macroeconomic challenges, including **inflationary pressures and shifts in trade policies**, continue to affect operations, driving cost fluctuations in fruit, labor, packaging, and operating expenses[85](index=85&type=chunk)[86](index=86&type=chunk) - A temporary **FDA detention hold on Calavo de México (CDM)** in July 2025, due to trace Imazalil, resulted in approximately **$4.2 million in incremental costs** (inspection, logistics, inventory write-downs), though the hold was lifted in September 2025[87](index=87&type=chunk) - Ongoing uncertainty in U.S. trade policy with Mexico, including potential tariffs (e.g., **25% on imports, briefly in effect March 2025**) and the termination of the U.S.–Mexico Tomato Suspension Agreement (imposing a **17% anti-dumping duty**), could raise input costs and disrupt supply chains[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) - A temporary pause in operations at a Mexican packinghouse in Q1 fiscal 2025 due to **avocado weevils**, though resolved, highlights ongoing supply chain disruption risks from pests or phytosanitary issues[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [Critical Accounting Estimates](index=34&type=section&id=Critical%20Accounting%20Estimates) No material changes occurred in Calavo's critical accounting estimates during the three and nine months ended July 31, 2025 - No material changes in critical accounting estimates for the three and nine months ended July 31, 2025[99](index=99&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Calavo's nine-month results show increased net sales and gross profit, driven by higher avocado pricing and Prepared segment growth, alongside reduced SG&A expenses [Net Sales](index=34&type=section&id=Net%20Sales) For the nine months, net sales grew 7% to $523.8 million, driven by higher avocado pricing in Fresh and increased volumes in Prepared, despite a slight decline in the three-month period Net Sales by Segment | Segment | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Fresh | $155,851 | $163,218 | -4.5% | $470,307 | $442,999 | +6.2% | | Prepared | $22,971 | $16,378 | +40.2% | $53,446 | $48,586 | +10.0% | | Total | $178,822 | $179,596 | -0.4% | $523,753 | $491,585 | +6.5% | - For the three months, Fresh avocado sales decreased **3%** due to a **5% volume decline**, partially offset by a **2% price increase**, while tomato sales decreased **40%** due to a **27% volume decline** and **18% price decrease**, impacted by the termination of the Tomato Suspension Agreement[107](index=107&type=chunk) - For the nine months, Fresh avocado sales increased **12%** due to a **22% price increase**, partially offset by a **9% volume decline**, while tomato sales decreased **37%** due to a **34% volume decline** and **6% price decrease**, impacted by adverse weather and abundant domestic supply[107](index=107&type=chunk) - Prepared segment sales increased **40% (3 months) and 10% (9 months)** primarily due to increased pounds sold (**35% and 11% respectively**), expanded sales to existing customers, and new customer wins[107](index=107&type=chunk)[110](index=110&type=chunk) [Gross Profit](index=38&type=section&id=Gross%20Profit) Consolidated gross profit decreased 9% for the three months due to FDA detention costs, but increased 1% for the nine months, driven by Prepared segment growth Gross Profit by Segment | Segment | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Fresh | $12,427 | $18,175 | -31.6% | $38,617 | $40,958 | -5.7% | | Prepared | $5,771 | $1,918 | +200.9% | $13,398 | $10,556 | +26.9% | | Total | $18,198 | $20,093 | -9.4% | $52,015 | $51,514 | +1.0% | - The **$4.2 million in discrete costs** associated with the FDA detention hold on Mexican avocados significantly impacted Q3 2025 gross profit, recorded in cost of sales[113](index=113&type=chunk) - Fresh segment gross profit decreased due to **lower avocado and tomato volumes** and **regulatory costs** (FDA detention, temporary tariff event)[115](index=115&type=chunk)[116](index=116&type=chunk)[119](index=119&type=chunk) - Prepared segment gross profit increased due to **higher sales volumes, lower fruit input costs, and improved operating efficiencies**[114](index=114&type=chunk)[117](index=117&type=chunk) [Selling, General and Administrative](index=40&type=section&id=Selling%2C%20General%20and%20Administrative) SG&A expenses decreased by 12% for the three months and 19% for the nine months, primarily due to reduced professional, consulting, and compensation expenses Selling, General and Administrative Expenses | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Selling, general and administrative | $9,232 | $10,510 | -12.2% | $29,822 | $36,993 | -19.4% | | Percentage of net sales | 5% | 6% | -1% | 6% | 8% | -2% | - The decrease in SG&A was driven by a **$2.0 million reduction in professional and consulting fees** (including lower FCPA-related legal expenses) for the three months, and a **$5.1 million reduction** for the nine months, along with lower compensation and stock-based compensation expenses[120](index=120&type=chunk)[121](index=121&type=chunk) [Foreign currency loss](index=42&type=section&id=Foreign%20currency%20loss) Foreign currency remeasurement losses decreased by 41% for the three months and 11% for the nine months, reflecting Mexican peso exchange rate fluctuations Foreign Currency Loss | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Foreign currency loss | $(2,483) | $(4,203) | -41.0% | $(2,488) | $(2,799) | -11.1% | [Income (loss) from unconsolidated entities](index=42&type=section&id=Income%20%28loss%29%20from%20unconsolidated%20entities) Income from unconsolidated entities improved significantly, moving from a loss to income for the nine months ended July 31, 2025 Income (Loss) from Unconsolidated Entities | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Income (loss) from unconsolidated entities | $(402) | $(579) | -30.6% | $178 | $(374) | +147.6% | [Income tax benefit (expense)](index=42&type=section&id=Income%20tax%20benefit%20%28expense%29) The company recorded an income tax expense of $1.8 million for the three months and $5.6 million for the nine months, with an effective tax rate of 26% Income Tax Benefit (Expense) | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (YoY) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (YoY) | | :---------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Income tax benefit (expense) | $(1,807) | $1,441 | -225.4% | $(5,598) | $478 | -1271.1% | | Effective tax rate | 26% | -37% | N/A | 26% | -5% | N/A | - The effective tax rate for both periods in 2025 was **26%**, differing from the U.S. federal statutory rate of 21% due to U.S. state tax and foreign tax rate differentials in Mexico[125](index=125&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Cash provided by operating activities increased to $19.2 million, with strong liquidity maintained through cash and cash equivalents, an amended credit facility, and a stock repurchase program - Cash provided by operating activities was **$19.2 million** for the nine months ended July 31, 2025, up from $13.6 million in the prior year[127](index=127&type=chunk) - Cash and cash equivalents totaled **$63.8 million** as of July 31, 2025, and working capital was **$89.9 million**, up from $57.0 million and $85.4 million, respectively, at October 31, 2024[132](index=132&type=chunk) - The revolving credit facility was amended to **$75.0 million** (from $90.0 million) in August 2024, with approximately **$50.5 million available for borrowing** as of July 31, 2025, at a weighted-average interest rate of **8.0%**[135](index=135&type=chunk)[139](index=139&type=chunk) - A stock repurchase program of up to **$25 million** was authorized in March 2025, though no shares have been repurchased to date[140](index=140&type=chunk) [Contractual Commitments](index=46&type=section&id=Contractual%20Commitments) No material changes have occurred in Calavo's contractual commitments since the prior fiscal year's Annual Report on Form 10-K - No material changes to contractual commitments since the last Annual Report on Form 10-K[141](index=141&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures have occurred since the Annual Report on Form 10-K for the year ended October 31, 2024 - No material changes in market risk disclosures[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.Controls%20and%20Procedures) Calavo's disclosure controls and procedures were effective as of July 31, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were **effective** as of July 31, 2025[143](index=143&type=chunk) - No material changes in internal control over financial reporting during the quarter ended July 31, 2025[144](index=144&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.Legal%20Proceedings) Information regarding legal proceedings is referenced in Note 6 to the unaudited condensed consolidated financial statements - Legal proceedings information is detailed in **Note 6** of the financial statements[146](index=146&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%20Risk%20Factors%201A.) No material changes to the risk factors have been disclosed since the Annual Report on Form 10-K for fiscal year ended October 31, 2024 - No material changes to risk factors from previous filings[148](index=148&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.Other%20Information) This section confirms no new Rule 10b5-1 trading arrangements and provides an update on cybersecurity governance and program enhancements [Trading Plans](index=49&type=section&id=Trading%20Plans) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended July 31, 2025 - No new Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers[150](index=150&type=chunk) [Supplemental Cybersecurity Governance and Program Update](index=49&type=section&id=Supplemental%20Cybersecurity%20Governance%20and%20Program%20Update) The Board of Directors provides direct oversight of cybersecurity risk, with an ongoing NIST Framework evaluation and systematic program enhancement initiative - The Board of Directors provides **direct oversight of cybersecurity risk**, supported by directors with relevant experience[151](index=151&type=chunk) - An ongoing evaluation against the **NIST Cybersecurity Framework 2.0** is expected to be completed in Q4 2025, indicating the residual risk profile is within acceptable parameters[152](index=152&type=chunk) - A twelve-month systematic program enhancement initiative has been launched to **elevate cybersecurity program maturity** through structured documentation, policy refinement, and capability advancement[153](index=153&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents for financial data - Includes certifications from the **CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[154](index=154&type=chunk) - Contains **Inline XBRL documents** for the consolidated financial statements and other financial information[156](index=156&type=chunk)[157](index=157&type=chunk) [Signatures](index=51&type=section&id=Signatures) The report is duly signed on behalf of Calavo Growers, Inc. by the Chief Executive Officer and Chief Financial Officer on September 9, 2025 - The report was signed by **Lecil E. Cole (CEO)** and **James Snyder (CFO)** on September 9, 2025[160](index=160&type=chunk)

Core Viewpoint - Calavo Growers, Inc. reported its financial results for the third fiscal quarter and nine-month period ended July 31, 2025, highlighting challenges in the Fresh segment due to a temporary FDA detention hold, while the Prepared segment showed significant growth [1][10]. Third Quarter Financial Overview - Total net sales were $178.8 million, a decrease of less than 1% from the prior year [6][11]. - Fresh segment sales were $155.9 million, a 5% decrease from the prior year, while Prepared segment sales were $22.9 million, a 40% increase [6][20]. - Gross profit was $18.2 million, a 9% decrease from the prior year quarter, impacted by approximately $4.2 million in costs related to the FDA detention hold [6][20]. - Net income from continuing operations was $4.7 million, or $0.26 per diluted share, compared to $5.4 million, or $0.30 per diluted share, in the prior year [6][15]. - Adjusted net income was $10.2 million, or $0.57 per diluted share, compared to $10.0 million, or $0.56 per diluted share, in the prior year [6][15]. - Adjusted EBITDA was $15.1 million, compared to $12.9 million in the prior year [6][15]. Nine-Month Period Financial Overview - Total net sales for the nine months ended July 31, 2025, were $523.8 million, a 7% increase from the prior year period [16][19]. - Fresh segment sales were $470.3 million, a 6% increase, while Prepared segment sales were $53.5 million, a 10% increase [16][21]. - Gross profit for the nine-month period was $52.0 million, a 1% increase from the prior year period [17][19]. - Net income from continuing operations was $16.1 million, or $0.89 per diluted share, compared to $9.3 million, or $0.52 per diluted share, in the prior year period [19][19]. - Adjusted net income increased to $23.8 million, or $1.33 per diluted share, compared to $19.2 million, or $1.08 per diluted share in the prior year period [19][19]. - Adjusted EBITDA was $35.7 million, compared to $29.9 million in the prior year period [19][19]. Segment Performance - Fresh segment results reflected an 8% decrease in cartons sold, driven by declines in both avocado and tomato carton sales [7][20]. - Prepared segment net sales increased primarily due to a 35% increase in sales volume [7][20]. - Fresh segment gross profit was $12.4 million, a 32% decrease from the prior year, while Prepared segment gross profit was $5.8 million, a 201% increase from the prior year [6][20]. Balance Sheet and Liquidity - As of July 31, 2025, the company had cash and cash equivalents of $63.8 million and $114.3 million in available liquidity [22][22]. - Total debt was $5.1 million, consisting of other long-term obligations and finance leases [22][22]. Management Commentary - Management noted that the third quarter results highlight both challenges and opportunities, particularly in the Fresh segment due to the FDA detention hold, while the Prepared segment showed strong growth [10][10]. - The FDA matter has been resolved, and management believes it was a non-recurring event [10][10]. - The company projects Prepared segment sales of approximately $115 million for fiscal 2026, indicating a positive outlook for growth [10][10].

Core Viewpoint - Calavo Growers, Inc. is set to release its financial results for the fiscal third quarter ended July 31, 2025, on September 9, 2025, after market close [1]. Company Overview - Calavo Growers, Inc. is a global leader in the processing and distribution of avocados, tomatoes, papayas, and guacamole [2]. - The company operates under the Calavo brand name, along with proprietary sub-brands, private labels, and store brands [2]. - Founded in 1924, Calavo has a strong culture of innovation, sustainable practices, and market growth [2]. - The company serves various sectors including retail grocery, foodservice, club stores, mass merchandisers, food distributors, and wholesalers worldwide [2]. - Calavo is headquartered in Santa Paula, California, with facilities across the U.S. and Mexico [2].

Core Viewpoint - Calavo Growers, Inc. has received a non-binding proposal to acquire all outstanding shares at a nominal value of $32.00 per share, which includes a mix of stock and cash, pending due diligence and financing [1]. Company Overview - Calavo Growers, Inc. is a global leader in sourcing, packing, and distributing fresh avocados, tomatoes, papayas, and processing guacamole and other avocado products [2]. - The company was founded in 1924 and has a strong culture of innovation and sustainable practices, serving various markets including retail grocery, foodservice, and wholesalers worldwide [2]. - Calavo is headquartered in Santa Paula, California, with facilities across the U.S. and Mexico [2].