[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated condensed financial statements for the three and six months ended April 30, 2020, including balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes covering accounting policies, segment information, acquisitions, leases, and significant events such as the impact of the COVID-19 pandemic and ongoing Mexican tax audits [Consolidated Condensed Balance Sheets](index=5&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Balance Sheet Highlights (in thousands) | Metric | April 30, 2020 | October 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $146,430 | $127,515 | | **Total Assets** | $475,502 | $390,360 | | **Total Current Liabilities** | $121,015 | $90,629 | | **Total Liabilities** | $191,252 | $104,491 | | **Total Shareholders' Equity** | $284,250 | $285,869 | - Total assets increased primarily due to the addition of operating lease right-of-use assets (**$63.7 million**) and an increase in goodwill (**$9.8 million**)[13](index=13&type=chunk) - Total liabilities rose significantly, driven by new operating lease liabilities (**$67.7 million**) and short-term borrowings (**$45.0 million**)[13](index=13&type=chunk) [Consolidated Condensed Statements of Operations](index=7&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended April 30, 2020 | Three Months Ended April 30, 2019 | | :--- | :--- | :--- | | Net Sales | $281,166 | $286,236 | | Gross Profit | $22,075 | $36,837 | | Operating Income | $7,625 | $23,107 | | Net Income (Loss) | $(3,407) | $16,278 | | Diluted EPS | $(0.19) | $0.93 | - The company experienced a significant swing from a net income of **$16.3 million** in Q2 2019 to a net loss of **$3.4 million** in Q2 2020, largely driven by a **$10.3 million** unrealized loss on Limoneira shares and a **40% decrease in gross profit**[17](index=17&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=8&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Six Months Ended April 30, in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash (used in) provided by Operating Activities | $(3,022) | $26,603 | | Net cash used in Investing Activities | $(25,810) | $(13,688) | | Net cash provided by (used in) Financing Activities | $24,143 | $(7,074) | - Cash from operations turned negative for the six months ended April 30, 2020, a significant decrease from the prior year, primarily due to a net loss and unfavorable changes in working capital[19](index=19&type=chunk) - Investing activities included an **$18.4 million** cash outflow for the acquisition of SFFI[19](index=19&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) - The company operates in three business segments: Fresh products (avocados, tomatoes), Calavo Foods (prepared avocado products), and Renaissance Food Group (RFG) (fresh-cut fruit and vegetables)[23](index=23&type=chunk)[33](index=33&type=chunk) - On February 14, 2020, the company completed the acquisition of Simply Fresh Fruit (SFFI) for **$18.4 million** in cash, adding **$9.8 million** in goodwill and **$11.0 million** in intangible assets[67](index=67&type=chunk)[137](index=137&type=chunk)[141](index=141&type=chunk) - The company is facing two significant tax assessments from Mexican authorities for fiscal years 2011 and 2013, totaling approximately **$91.9 million** and **$108.7 million USD**, respectively, which the company believes are without merit and is appealing[81](index=81&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) - The COVID-19 pandemic began to have an adverse impact in March 2020, causing cancelled orders, altered customer buying patterns, and reduced margins, particularly affecting the foodservice business[149](index=149&type=chunk)[145](index=145&type=chunk) - The company adopted the new lease accounting standard (ASC 842) on November 1, 2019, which resulted in the recognition of **$63.7 million** in operating lease right-of-use assets and **$67.7 million** in operating lease liabilities on the balance sheet[118](index=118&type=chunk)[128](index=128&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the second quarter of 2020, highlighting a 2% decrease in net sales and a 40% drop in gross profit year-over-year, detailing the performance of each business segment, noting that strong sales in the Fresh products segment were offset by declines in the Calavo Foods and RFG segments, which were significantly impacted by the COVID-19 pandemic's effect on foodservice demand, and covering liquidity, capital resources, and recent organizational changes [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Net Sales by Segment (Three Months Ended April 30, in thousands) | Segment | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Fresh products | $170,868 | $151,212 | 13% | | Calavo Foods | $17,853 | $22,041 | (19)% | | RFG | $93,529 | $113,992 | (18)% | | **Total Net Sales** | **$281,166** | **$286,236** | **(2)%** | Gross Profit by Segment (Three Months Ended April 30, in thousands) | Segment | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Fresh products | $14,405 | $27,824 | (48)% | | Calavo Foods | $4,934 | $6,546 | (25)% | | RFG | $2,736 | $2,467 | 11% | | **Total Gross Profit** | **$22,075** | **$36,837** | **(40)%** | - The Fresh products segment's gross profit margin decreased significantly from **18.4%** in Q2 2019 to **8.4%** in Q2 2020, impacted by unfavorable market conditions compared to the prior year, COVID-19 related losses, and a **$3.4 million** foreign currency remeasurement loss due to the strengthening U.S. Dollar against the Mexican Peso[186](index=186&type=chunk)[187](index=187&type=chunk) - Sales in the Calavo Foods and RFG segments declined due to reduced demand from foodservice customers and changing consumer buying patterns related to COVID-19[179](index=179&type=chunk)[181](index=181&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) - As of April 30, 2020, the company had cash and cash equivalents of **$3.3 million** and working capital of **$25.4 million**, down from **$8.0 million** and **$36.9 million**, respectively, at October 31, 2019[207](index=207&type=chunk) - For the six months ended April 30, 2020, cash used in operating activities was **$3.0 million**, a sharp contrast to the **$26.6 million** provided by operating activities in the same period of 2019[201](index=201&type=chunk) - The company has an **$80 million** revolving credit facility, with an option to increase by **$50 million**, and as of April 30, 2020, **$45.0 million** was outstanding under this facility[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies its main market risks as interest rate fluctuations on its variable-rate credit facility and foreign currency exchange risk, particularly between the Mexican peso and the U.S. dollar, with a significant portion of business transacted in pesos, and recorded a $3.4 million foreign currency remeasurement loss in the second quarter of 2020, without currently using derivative instruments to hedge these risks - The company's primary market risks are interest rate risk on borrowings and foreign currency risk from its Mexican operations[215](index=215&type=chunk) - A significant portion of business is transacted in Mexican pesos, and the company recorded a foreign currency remeasurement loss of **$3.4 million** for the three months ended April 30, 2020, compared to a **$0.2 million** loss in the prior-year period[217](index=217&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of April 30, 2020, noting material changes to internal controls during the period, including the implementation of a new lease accounting system for ASC 842 and the appointment of a new Corporate Controller and Chief Financial Officer - Based on an evaluation, the principal executive and financial officers concluded that disclosure controls and procedures were effective[218](index=218&type=chunk) - Material changes in internal control over financial reporting included the implementation of a new lease accounting system (Topic 842) and the appointment of a new Corporate Controller and CFO[218](index=218&type=chunk)[221](index=221&type=chunk) [PART II. OTHER INFORMATION](index=64&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is involved in ordinary course litigation from time to time but does not believe any current proceedings will have a material adverse impact on its financial statements - The company is involved in litigation arising in the ordinary course of business, which is not expected to have a material adverse impact on its financial statements[222](index=222&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) This section updates the company's risk factors, with a primary focus on the significant and ongoing risks posed by the COVID-19 pandemic, including potential disruptions to manufacturing and supply chains, uncertainty in future consumer demand, increased operational costs related to safety measures, and the risk of future impairment of goodwill and intangible assets if the pandemic's adverse effects are prolonged - The COVID-19 pandemic poses significant risks to the business, including: - **Manufacturing and Supply Chain Disruption:** Challenges in operations due to health and safety measures for employees and disruptions among suppliers and logistics providers[224](index=224&type=chunk)[225](index=225&type=chunk) - **Uncertain Consumer Demand:** Potential for future declines in product demand due to economic deterioration and reduced consumer confidence[226](index=226&type=chunk) - **Increased Costs:** Higher expenses related to overtime, sick pay, safety measures, and temporary facility closures[227](index=227&type=chunk) - If the COVID-19 pandemic has a prolonged adverse impact on operating results, the company's significant goodwill and intangible balances, particularly for the RFG segment, may be at risk of future impairment[230](index=230&type=chunk)[231](index=231&type=chunk) [Item 6. Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including multiple amendments to the Senior Promissory Note with FreshRealm, LLC, and the required certifications by the Chief Executive Officer and Principal Financial Officer under the Sarbanes-Oxley Act of 2002 - The filing includes several amendments to the Senior Promissory Note between Calavo Growers, Inc. and FreshRealm, LLC, dated from September 2019 to April 2020[232](index=232&type=chunk) - Certifications by the CEO and CFO pursuant to Sections 302 and 905 of the Sarbanes-Oxley Act are included as exhibits[232](index=232&type=chunk)

Calavo Growers, Inc. (NASDAQ:CVGW) Q2 2020 Earnings Conference Call June 8, 2020 5:00 PM ET Company Participants Lisa Mueller - Financial Profiles James Gibson - CEO & President, Renaissance Food Group Kevin Manion - CFO Conference Call Participants Robert Dickerson - Jefferies Mark Smith - Lake Street Capital Markets Mitchell Pinheiro - Sturdivant & Co. Benjamin Bienvenu - Stephens Inc. Operator Hello, and welcome to Calavo Growers' Second Quarter 2020 Earnings Conference Call. [Operator Instructions]. I w ...

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, 2020 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 incorporation) (I.R.S. Employer Identi ...

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, 2019 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. | --- | --- | --- | |----------------------------------------------------------------------------------------|----------------------------------------- ...

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, 2019 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 incorporation) (I.R.S. Employer Identific ...

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 April 30, 2019 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 incorporation) (I.R.S. Employer Identifi ...

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, 2019 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 incorporation) (I.R.S. Employer Identi ...