Limoneira Company (NASDAQ:LMNR) Q2 2022 Earnings Conference Call June 7, 2022 4:30 PM ET Company Participants John Mills - IR, ICR Harold Edwards - President & CEO Mark Palamountain - CFO Conference Call Participants Jack Atkins - Stephens Gerry Sweeney - ROTH Capital Ben Klieve - Lake Street Capital Markets Eric Larson - Seaport Research Partners Operator Greetings, and welcome to the Limoneira’s Second Quarter Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a list ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited statements detail the company's financial position, performance, and cash flows for the period ended April 30, 2022 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20%E2%80%93%20April%2030%2C%202022%20and%20October%2031%2C%202021) Total assets slightly decreased to $390.7 million, while increased liabilities led to a decline in stockholders' equity to $180.0 million Consolidated Balance Sheet Highlights (in thousands) | Metric | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $392,276 | $390,744 | $(1,532) | | Total Liabilities | $193,031 | $199,958 | $6,927 | | Total Stockholders' Equity | $188,435 | $179,976 | $(8,459) | | Cash | $439 | $960 | $521 | | Accounts Receivable, net | $17,483 | $22,139 | $4,656 | | Current Portion of Long-Term Debt | $2,472 | $3,678 | $1,206 | | Long-Term Debt, less current portion | $130,353 | $135,575 | $5,222 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20%E2%80%93%20three%20and%20six%20months%20ended%20April%2030%2C%202022%20and%202021) For the six-month period, a 3% revenue increase was offset by a 7% rise in costs, widening the net loss to $5.0 million Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | 3 Months Ended Apr 30, 2022 | 3 Months Ended Apr 30, 2021 | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Net Revenues | $46,750 | $45,132 | $86,024 | $83,407 | | Total Costs and Expenses | $44,164 | $42,748 | $92,996 | $86,663 | | Operating Income (Loss) | $2,586 | $2,384 | $(6,972) | $(3,256) | | Net Income (Loss) | $1,572 | $1,513 | $(5,034) | $(2,403) | | Net Income (Loss) Attributable to Limoneira Company | $1,561 | $1,933 | $(4,957) | $(2,275) | | Basic Net Income (Loss) per Common Share | $0.08 | $0.10 | $(0.30) | $(0.15) | | Diluted Net Income (Loss) per Common Share | $0.08 | $0.10 | $(0.30) | $(0.15) | [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20%E2%80%93%20three%20and%20six%20months%20ended%20April%2030%2C%202022%20and%202021) Comprehensive loss widened to $5.8 million for the six-month period, driven primarily by negative foreign currency translation adjustments Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | 3 Months Ended Apr 30, 2022 | 3 Months Ended Apr 30, 2021 | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) | $1,572 | $1,513 | $(5,034) | $(2,403) | | Foreign currency translation adjustments | $(1,006) | $577 | $(951) | $1,372 | | Minimum pension liability adjustment | $73 | $134 | $145 | $268 | | Total other comprehensive (loss) income | $(933) | $711 | $(806) | $1,640 | | Comprehensive income (loss) | $639 | $2,224 | $(5,840) | $(763) | [Consolidated Statements of Stockholders' Equity and Temporary Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20and%20Temporary%20Equity%20%E2%80%93%20three%20and%20six%20months%20ended%20April%2030%2C%202022%20and%202021) Total stockholders' equity decreased by $8.5 million to $180.0 million, primarily due to the net loss and other comprehensive loss Consolidated Stockholders' Equity Highlights (in thousands) | Metric | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Total Stockholders' Equity | $188,435 | $179,976 | $(8,459) | | Retained Earnings | $21,552 | $13,691 | $(7,861) | | Accumulated Other Comprehensive Loss | $(5,733) | $(6,539) | $(806) | | Common Stock Shares Outstanding | 17,685,400 | 17,721,551 | 36,151 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20six%20months%20ended%20April%2030%2C%202022%20and%202021) Net cash used in operations was $1.2 million, a significant reversal from the $4.6 million provided in the prior-year period Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | Change | | :----- | :-------------------------- | :-------------------------- | :----- | | Net cash (used in) provided by operating activities | $(1,160) | $4,643 | $(5,803) | | Net cash used in investing activities | $(442) | $(5,501) | $5,059 | | Net cash provided by financing activities | $2,326 | $1,908 | $418 | | Net increase in cash | $521 | $1,089 | $(568) | | Cash at end of period | $960 | $1,590 | $(630) | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, segment information, debt, and other key financial items [1. Organization and Basis of Presentation](index=11&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) Limoneira is an agribusiness focused on citrus and avocados, with additional operations in real estate development and rentals - Limoneira Company's core business involves growing citrus (lemons, oranges, specialty citrus) and avocados, along with packing, marketing, and selling these products[27](index=27&type=chunk) - The company terminated its Avocado Marketing Agreement with Calavo Growers, Inc. in February 2022 to pursue new packing and marketing opportunities[29](index=29&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines key accounting policies and highlights the ongoing negative financial impact of the COVID-19 pandemic - The COVID-19 pandemic has negatively impacted the company's sales and profitability since Q2 fiscal year 2020 and is expected to continue affecting future periods, with the full impact remaining uncertain[35](index=35&type=chunk) - The company adopted ASU 2020-06 (Accounting for Convertible Instruments and Contracts in an Entity's Own Equity) effective November 1, 2021, which did not have a material impact on its consolidated financial statements[37](index=37&type=chunk) [3. Concentrations and Geographic Information](index=15&type=section&id=3.%20Concentrations%20and%20Geographic%20Information) The company has diversified revenue streams but relies on two key customers for a significant portion of revenue and third-party growers for lemon supply - Two customers accounted for **13% and 11% of total revenue** for the six months ended April 30, 2022[39](index=39&type=chunk) - Third-party growers supplied **54% of the company's lemon supply** for the six months ended April 30, 2022[40](index=40&type=chunk) - The company leased its 1,200-acre lemon ranch in Argentina (Finca Santa Clara) to FGF Trapani for a fixed sum of $400,000 over 14 months, effective November 1, 2021[42](index=42&type=chunk) [4. Prepaid Expenses and Other Current Assets](index=15&type=section&id=4.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Prepaid expenses and other current assets remained stable, with a notable increase in lemon supplier advances offset by a note receivable collection Prepaid Expenses and Other Current Assets (in thousands) | Item | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :--- | :-------------------------- | :-------------------------- | :-------------------- | | Prepaid supplies and insurance | $2,521 | $3,030 | $509 | | Note receivable and related interest | $2,438 | $0 | $(2,438) | | Lemon supplier advances | $676 | $3,073 | $2,397 | | Total | $10,709 | $10,648 | $(61) | [5. Real Estate Development](index=15&type=section&id=5.%20Real%20Estate%20Development) The company's real estate joint venture continues to close residential unit sales, and proceeds from property sales have been collected - The joint venture Limoneira Lewis Community Builders, LLC (LLCB) has closed sales for **586 residential units** in the East Area I project through April 30, 2022[52](index=52&type=chunk) - The company received full payment of a **$2.35 million promissory note** from the sale of its Centennial property in April 2022, recognizing a deferred gain of $161,000[54](index=54&type=chunk) - The sale of the Sevilla property for **$2.7 million** is expected to close in fiscal year 2022, with an immaterial gain[53](index=53&type=chunk) [6. Equity in Investments](index=18&type=section&id=6.%20Equity%20in%20Investments) Equity in investments remained stable, though net income attributable from the LLCB joint venture decreased significantly Equity in Investments (in thousands) | Investment | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :--------- | :-------------------------- | :-------------------------- | :-------------------- | | Limoneira Lewis Community Builders, LLC | $60,216 | $60,479 | $263 | | Total Equity in Investments | $64,072 | $64,290 | $218 | LLCB Summarized Financial Information (in thousands) | LLCB Financials | 6 Months Ended Apr 30, 2021 | 6 Months Ended Apr 30, 2022 | Change | | :-------------- | :-------------------------- | :-------------------------- | :----- | | Revenues | $19,827 | $865 | $(18,962) | | Net income attributable to Limoneira Company | $2,005 | $287 | $(1,718) | [7. Goodwill and Intangible Assets, Net](index=18&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets%2C%20Net) Goodwill and intangible assets decreased slightly due to foreign currency adjustments and amortization, with no impairment charges recorded Goodwill and Intangible Assets, Net (in thousands) | Metric | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Goodwill | $1,527 | $1,520 | $(7) | | Intangible Assets, Net | $8,329 | $7,873 | $(456) | - Amortization expense for intangible assets totaled **$361,000** for the six months ended April 30, 2022, down from $526,000 in the prior year[63](index=63&type=chunk) [8. Other Assets](index=20&type=section&id=8.%20Other%20Assets) Investments in mutual water companies, which provide rights to water shares, increased during the period Investments in Mutual Water Companies (in thousands) | Item | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :--- | :-------------------------- | :-------------------------- | :-------------------- | | Investments in Mutual Water Companies | $5,994 | $6,484 | $490 | [9. Accrued Liabilities](index=20&type=section&id=9.%20Accrued%20Liabilities) Accrued liabilities increased slightly, driven by higher compensation and operating expense accruals Accrued Liabilities (in thousands) | Item | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :--- | :-------------------------- | :-------------------------- | :-------------------- | | Compensation | $2,112 | $2,392 | $280 | | Property taxes | $676 | $14 | $(662) | | Operating expenses | $1,203 | $2,343 | $1,140 | | Total Accrued Liabilities | $6,542 | $6,802 | $260 | [10. Long-Term Debt](index=21&type=section&id=10.%20Long-Term%20Debt) Total long-term debt increased to $139.3 million, with the company expecting to remain in compliance with its debt covenants Long-Term Debt (in thousands) | Debt Type | Oct 31, 2021 (in thousands) | Apr 30, 2022 (in thousands) | Change (in thousands) | | :-------- | :-------------------------- | :-------------------------- | :-------------------- | | Farm Credit West revolving and non-revolving lines of credit | $111,293 | $114,797 | $3,504 | | Farm Credit West revolving equity line of credit | $0 | $4,305 | $4,305 | | Total Long-Term Debt, Net | $132,825 | $139,253 | $6,428 | - The company has an aggregate borrowing capacity of **$130 million** under its Farm Credit West Credit Facility and RELOC, with **$10.9 million available** as of April 30, 2022[70](index=70&type=chunk)[201](index=201&type=chunk) - The company expects to maintain compliance with its debt service coverage ratio covenant of **1.25:1.0**, measured annually as of October 31, 2022[76](index=76&type=chunk)[202](index=202&type=chunk) [11. Leases](index=22&type=section&id=11.%20Leases) The company's lease activities as both lessor and lessee expanded, with increases in lease revenue, assets, and liabilities Total Lease Revenue (in thousands) | Metric | 6 Months Ended Apr 30, 2021 | 6 Months Ended Apr 30, 2022 | Change | | :----- | :-------------------------- | :-------------------------- | :----- | | Total Lease Revenue (Lessor) | $2,281 | $2,572 | $291 | Lease Assets and Liabilities (in thousands) | Lease Item | Oct 31, 2021 | Apr 30, 2022 | Change | | :--------- | :----------- | :----------- | :----- | | Total Lease Assets | $3,183 | $4,213 | $1,030 | | Total Lease Liabilities | $3,269 | $4,198 | $929 | [12. Basic and Diluted Net Income (Loss) per Share](index=26&type=section&id=12.%20Basic%20and%20Diluted%20Net%20Income%20(Loss)%20per%20Share) Net loss per common share doubled to $(0.30) for the six-month period, reflecting the increased net loss attributable to common stock Basic and Diluted Net Income (Loss) per Common Share | Metric | 3 Months Ended Apr 30, 2022 | 3 Months Ended Apr 30, 2021 | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic Net Income (Loss) per Common Share | $0.08 | $0.10 | $(0.30) | $(0.15) | | Diluted Net Income (Loss) per Common Share | $0.08 | $0.10 | $(0.30) | $(0.15) | [13. Related Party Transactions](index=27&type=section&id=13.%20Related%20Party%20Transactions) The company engages in transactions with related parties, including joint ventures, and terminated its relationship with Calavo Growers - Calavo Growers, Inc. is **no longer considered a related party** as of February 2022[94](index=94&type=chunk) - The company has a new lease agreement with FGF Trapani for its Finca Santa Clara lemon ranch in Argentina, generating rental revenue[94](index=94&type=chunk) [14. Income Taxes](index=28&type=section&id=14.%20Income%20Taxes) The company recorded a $1.9 million income tax benefit for the six-month period, with an effective tax rate higher than the federal statutory rate - The effective tax rate for the six months ended April 30, 2022, exceeded the **21% federal statutory rate** due to foreign taxes, state taxes, stock-based compensation, and nondeductible items[95](index=95&type=chunk) Income Tax (Expense) Benefit (in thousands) | Metric | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | | :----- | :-------------------------- | :-------------------------- | | Income tax (expense) benefit | $1,928 | $213 | [15. Retirement Plans](index=28&type=section&id=15.%20Retirement%20Plans) The company terminated its defined benefit pension plan at the end of 2021, though net periodic benefit costs increased year-over-year - The Limoneira Company Retirement Plan, a defined benefit pension plan, was **terminated effective December 31, 2021**[96](index=96&type=chunk) Net Periodic Pension Cost (in thousands) | Metric | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | Change | | :----- | :-------------------------- | :-------------------------- | :----- | | Net periodic benefit cost | $585 | $331 | $254 | [16. Commitments and Contingencies](index=30&type=section&id=16.%20Commitments%20and%20Contingencies) The company is involved in ordinary course litigation, including a notable lawsuit against Southern California Edison related to the Thomas Fire - The company is a party to a lawsuit against Southern California Edison for unspecified damages from the Thomas Fire in fiscal year 2018, believing its claim is valid[102](index=102&type=chunk) [17. Stock-based Compensation and Treasury Stock](index=30&type=section&id=17.%20Stock-based%20Compensation%20and%20Treasury%20Stock) The company manages stock-based compensation programs and has an authorized but unused share repurchase program - **No Performance Awards were granted** for fiscal year 2021 due to the financial performance and other criteria not being met[104](index=104&type=chunk) - The company granted **70,000 shares** of common stock to key executives in December 2021, with 15,000 shares forfeited in February 2022[105](index=105&type=chunk) - A **$10 million share repurchase program** was approved in fiscal year 2021, but no shares have been repurchased under this program as of April 30, 2022[109](index=109&type=chunk)[204](index=204&type=chunk) [18. Segment Information](index=32&type=section&id=18.%20Segment%20Information) Agribusiness revenue increased to $83.5 million for the six-month period, but operating income declined significantly to $4.6 million - The company's agribusiness division comprises four reportable segments: fresh lemons, lemon packing, avocados, and other agribusiness (oranges, specialty citrus, and other crops)[110](index=110&type=chunk) Agribusiness Segment Performance (in thousands) | Metric | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | Change | | :----- | :-------------------------- | :-------------------------- | :----- | | Agribusiness Revenues from external customers | $83,452 | $81,126 | $2,326 | | Agribusiness Operating Income (Loss) | $4,609 | $7,746 | $(3,137) | [19. Subsequent Events](index=34&type=section&id=19.%20Subsequent%20Events) No material subsequent events requiring disclosure were identified after the reporting period - No material subsequent events requiring disclosure occurred between April 30, 2022, and the filing date[118](index=118&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance for the period, discussing operational results, liquidity, and the impact of the COVID-19 pandemic [Overview](index=35&type=section&id=Overview) Limoneira is a diversified agribusiness and real estate company with extensive land and water resources across the Americas - Limoneira Company is a long-standing agribusiness company (since 1893) focused on fruit production (lemons, avocados, oranges, specialty citrus), sales, marketing, rental operations, real estate, and capital investments[119](index=119&type=chunk)[120](index=120&type=chunk) - The company manages approximately **15,400 acres** of land and water resources across California, Arizona, Chile, and Argentina[119](index=119&type=chunk)[120](index=120&type=chunk) [Business Division Summary](index=35&type=section&id=Business%20Division%20Summary) The company's operations are structured across three primary divisions: agribusiness, rental operations, and real estate development - The company's operations are structured into three divisions: agribusiness, rental operations, and real estate development[123](index=123&type=chunk) - The agribusiness division includes fresh lemons, lemon packing, avocados, and other agribusiness (oranges, specialty citrus, other crops)[123](index=123&type=chunk) [Agribusiness Summary](index=35&type=section&id=Agribusiness%20Summary) The agribusiness division operates seasonally, focusing on high-quality citrus for export and managing cyclical avocado production - Agribusiness operations are seasonal, with cultural costs higher in the first and second quarters and harvest costs peaking in the third quarter[125](index=125&type=chunk) - The company focuses orange production on high-quality late season Navel oranges primarily for export to profitable niche markets like Japan, China, and Korea[129](index=129&type=chunk) - Avocado production is cyclical (bi-annual bearing) and faces growth constraints due to limited suitable land and water in Southern California[128](index=128&type=chunk) [Rental Operations Summary](index=37&type=section&id=Rental%20Operations%20Summary) Rental operations provide stable cash flows and support employee retention through affordable housing options - Rental operations generate reliable cash flows, partially funding business operating costs and providing affordable housing for employees, which helps maintain a dependable, long-term employee base[130](index=130&type=chunk) [Real Estate Development Summary](index=37&type=section&id=Real%20Estate%20Development%20Summary) The company's long-term real estate projects aim to generate capital for reinvestment into its core agribusiness operations - The company's real estate development strategy aims to redeploy earnings and cash flow into expanding its agribusiness and other income-producing real estate[131](index=131&type=chunk) - Real estate project financials are influenced by government approvals, economic conditions, financing, and product demand[131](index=131&type=chunk) [Water and Mineral Rights](index=37&type=section&id=Water%20and%20Mineral%20Rights) The company manages diverse water resources but faces significant challenges from severe drought conditions in California and Arizona - The company's water resources include rights to aquifers and canals in California, ground water in Arizona (Colorado River), and wells/surface water in Chile and Argentina[132](index=132&type=chunk)[133](index=133&type=chunk) - California and Arizona are experiencing severe to extreme drought conditions, resulting in significant water allocation reductions (e.g., **0% for San Joaquin Valley farmers in 2022**, 18% reduction from Lake Mead for Arizona), which may impact the company's orchards[134](index=134&type=chunk)[135](index=135&type=chunk) [Recent Developments](index=38&type=section&id=Recent%20Developments) Key recent activities include progress in real estate, new strategic alliances, and changes to marketing and international operations - The LLCB joint venture has closed sales for **586 residential units**[136](index=136&type=chunk) - An alliance was formed with Wileman Bros. & Elliott, Inc. to sell combined citrus volumes under Limoneira's "One World of Citrus" trademark, effective November 1, 2021[137](index=137&type=chunk) - The Avocado Marketing Agreement with Calavo was terminated in February 2022 to pursue other packing and marketing opportunities[138](index=138&type=chunk) - The company leased its 1,200-acre lemon ranch in Argentina to FGF Trapani for a fixed sum of **$400,000** over 14 months, retroactive to November 1, 2021[140](index=140&type=chunk) - The promissory note for the Centennial property sale was paid in full in April 2022, recognizing a **$161,000 deferred gain**[141](index=141&type=chunk) - A cash dividend of **$0.075 per common share** was declared on March 23, 2022, totaling $1.3 million[141](index=141&type=chunk) [COVID-19 Pandemic](index=38&type=section&id=COVID-19%20Pandemic) The pandemic continues to negatively affect sales and profitability due to suppressed lemon demand, though recovery is underway - The COVID-19 pandemic caused a significant decline in U.S. lemon market volume and export demand, negatively impacting sales and profitability through Q2 fiscal year 2022[142](index=142&type=chunk)[144](index=144&type=chunk) - Demand is recovering but has **not returned to pre-pandemic levels**, and future impacts on sales and profitability are uncertain[143](index=143&type=chunk)[144](index=144&type=chunk) - The company implemented measures to improve liquidity, such as postponing capital expenditures, selling equity, and reducing operating and discretionary spending[145](index=145&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) For the six-month period, revenue grew 3% to $86.0 million, but a 7% increase in costs led to a wider operating loss of $7.0 million Results of Operations Highlights (in thousands) | Metric | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | Change (in thousands) | Change (%) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | :--------- | | Total Net Revenues | $86,024 | $83,407 | $2,617 | 3% | | Total Costs and Expenses | $92,996 | $86,663 | $6,333 | 7% | | Operating Income (Loss) | $(6,972) | $(3,256) | $(3,716) | (114)% | | Net Income (Loss) Attributable to Limoneira Company | $(4,957) | $(2,275) | $(2,682) | (118)% | [Non-GAAP Financial Measures](index=40&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like EBITDA and Adjusted EBITDA show a significant decline in profitability compared to the prior year - EBITDA and adjusted EBITDA are used as non-GAAP measures to evaluate results, excluding depreciation, amortization, interest, income taxes, executive severance, and asset disposal gains/losses[148](index=148&type=chunk) EBITDA and Adjusted EBITDA (in thousands) | Metric | 3 Months Ended Apr 30, 2022 | 3 Months Ended Apr 30, 2021 | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | EBITDA | $5,435 | $6,056 | $(1,489) | $2,985 | | Adjusted EBITDA | $5,781 | $6,040 | $(458) | $2,969 | [Three Months Ended April 30, 2022 Compared to the Three Months Ended April 30, 2021](index=41&type=section&id=Three%20Months%20Ended%20April%2030%2C%202022%20Compared%20to%20the%20Three%20Months%20Ended%20April%2030%2C%202021) Quarterly revenue increased 4% to $46.8 million, driven by strong avocado and orange sales, though lemon revenue declined Agribusiness Revenues (Three Months Ended April 30, in thousands) | Agribusiness Revenue | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------------- | :----------- | :----------- | :-------------------- | :--------- | | Lemons | $37,735 | $38,703 | $(968) | (3)% | | Avocados | $3,576 | $2,707 | $869 | 32% | | Oranges | $2,617 | $1,404 | $1,213 | 86% | | Specialty citrus and other crops | $1,441 | $1,175 | $266 | 23% | | Total Agribusiness Revenues | $45,369 | $43,989 | $1,380 | 3% | Agribusiness Costs and Expenses (Three Months Ended April 30, in thousands) | Agribusiness Costs | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :----------------- | :----------- | :----------- | :-------------------- | :--------- | | Packing costs | $12,277 | $11,653 | $624 | 5% | | Growing costs | $7,997 | $6,713 | $1,284 | 19% | | Third-party grower and supplier costs | $9,572 | $10,271 | $(699) | (7)% | [Six Months Ended April 30, 2022 Compared to the Six Months Ended April 30, 2021](index=44&type=section&id=Six%20Months%20Ended%20April%2030%2C%202022%20Compared%20to%20the%20Six%20Months%20Ended%20April%2030%2C%202021) Six-month revenue grew 3% to $86.0 million, but a 7% rise in costs across packing, growing, and third-party supply drove higher losses Agribusiness Revenues (Six Months Ended April 30, in thousands) | Agribusiness Revenue | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------------- | :----------- | :----------- | :-------------------- | :--------- | | Lemons | $73,303 | $72,900 | $403 | 1% | | Avocados | $4,342 | $2,707 | $1,635 | 60% | | Oranges | $3,490 | $2,495 | $995 | 40% | | Specialty citrus and other crops | $2,317 | $3,024 | $(707) | (23)% | | Total Agribusiness Revenues | $83,452 | $81,126 | $2,326 | 3% | Agribusiness Costs and Expenses (Six Months Ended April 30, in thousands) | Agribusiness Costs | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :----------------- | :----------- | :----------- | :-------------------- | :--------- | | Packing costs | $23,557 | $22,030 | $1,527 | 7% | | Harvest costs | $10,812 | $10,443 | $369 | 4% | | Growing costs | $16,275 | $14,825 | $1,450 | 10% | | Third-party grower and supplier costs | $23,827 | $21,585 | $2,242 | 10% | [Income Taxes](index=44&type=section&id=Income%20Taxes) The company recorded a $1.9 million tax benefit on its pre-tax loss, with a projected annual effective tax rate of 32.5% - The company recorded an income tax benefit of **$1.9 million** for the six months ended April 30, 2022, on a pre-tax loss of $7.0 million[165](index=165&type=chunk) - The projected annual effective blended tax rate for fiscal year 2022, excluding discrete items, is approximately **32.5%**[165](index=165&type=chunk) [Net (Income) Loss Attributable to Noncontrolling Interest](index=44&type=section&id=Net%20(Income)%20Loss%20Attributable%20to%20Noncontrolling%20Interest) The net loss attributable to noncontrolling interests in PDA and Trapani Fresh decreased compared to the prior year - Noncontrolling interest represents 10% of PDA and 49% of Trapani Fresh's net income/loss[166](index=166&type=chunk) Net (Income) Loss Attributable to Noncontrolling Interest (in thousands) | Metric | 6 Months Ended Apr 30, 2022 | 6 Months Ended Apr 30, 2021 | Change | | :----- | :-------------------------- | :-------------------------- | :----- | | Net (income) loss attributable to noncontrolling interest | $77 | $128 | $(51) | [Segment Results of Operations](index=47&type=section&id=Segment%20Results%20of%20Operations) Agribusiness segment performance was mixed, with strong avocado results offset by a significant decline in fresh lemons operating income - The company evaluates segment performance based on revenues and operating income, allocating resources accordingly[112](index=112&type=chunk) Segment Operating Income (Loss) (Six Months Ended April 30, in thousands) | Segment Operating Income (Loss) | Apr 30, 2022 | Apr 30, 2021 | Change | | :------------------------------ | :----------- | :----------- | :----- | | Fresh Lemons | $1,209 | $3,764 | $(2,555) | | Lemon Packing | $6,455 | $6,562 | $(107) | | Avocados | $1,948 | $1,274 | $674 | | Other Agribusiness | $(631) | $643 | $(1,274) | [Three Months Ended April 30, 2022 Compared to the Three Months Ended April 30, 2021](index=47&type=section&id=Three%20Months%20Ended%20April%2030%2C%202022%20Compared%20to%20the%20Three%20Months%20Ended%20April%2030%2C%202021_segment) Quarterly segment results showed strong performance in Avocados and Other Agribusiness, while Fresh Lemons operating income declined [Fresh Lemons](index=47&type=section&id=Fresh%20Lemons) Fresh lemons segment revenue and costs both decreased by 5%, resulting in a slight decline in operating income Fresh Lemons Segment Performance (Three Months Ended April 30, in thousands) | Fresh Lemons | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------- | :----------- | :----------- | :-------------------- | :--------- | | Total Net Revenues | $30,992 | $32,600 | $(1,608) | (5)% | | Costs and Expenses | $27,222 | $28,629 | $(1,407) | (5)% | | Operating Income (Loss) | $3,770 | $3,971 | $(201) | (5)% | [Lemon Packing](index=49&type=section&id=Lemon%20Packing) Lemon packing revenue grew 5%, but a 7% increase in costs due to inflation led to a slight decrease in operating income Lemon Packing Segment Performance (Three Months Ended April 30, in thousands) | Lemon Packing | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------ | :----------- | :----------- | :-------------------- | :--------- | | Total Net Revenues | $16,116 | $15,385 | $731 | 5% | | Costs and Expenses | $11,662 | $10,874 | $788 | 7% | | Operating Income (Loss) | $4,454 | $4,511 | $(57) | (1)% | | Operating income per carton sold | $2.87 | $2.95 | $(0.08) | (3)% | - Increased costs for labor, cardboard, fruit treatments, and packing/shipping supplies due to **inflation and supply chain issues** drove up packing costs[172](index=172&type=chunk) [Avocados](index=49&type=section&id=Avocados) The avocado segment saw a 33% revenue increase, which outpaced a 42% rise in costs, leading to higher operating income Avocados Segment Performance (Three Months Ended April 30, in thousands) | Avocados | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :--------- | :----------- | :----------- | :-------------------- | :--------- | | Revenues | $3,576 | $2,707 | $869 | 32% | | Costs and Expenses | $2,073 | $1,433 | $640 | 45% | | Operating Income (Loss) | $1,503 | $1,274 | $229 | 18% | - Harvest costs for avocados increased by **$0.1 million**, and growing costs increased by **$0.5 million** in Q2 fiscal year 2022 compared to the prior year[175](index=175&type=chunk) [Other Agribusiness](index=49&type=section&id=Other%20Agribusiness) Other agribusiness revenue grew 57%, driven by orange and specialty citrus sales, resulting in a significant increase in operating income Other Agribusiness Segment Performance (Three Months Ended April 30, in thousands) | Other Agribusiness | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :----------------- | :----------- | :----------- | :-------------------- | :--------- | | Total Net Revenues | $4,058 | $2,579 | $1,479 | 57% | | Costs and Expenses | $3,828 | $2,503 | $1,325 | 53% | | Operating Income (Loss) | $230 | $76 | $154 | 203% | - Orange revenues increased by **$1.2 million**, and specialty citrus revenues increased by **$0.3 million** in Q2 fiscal year 2022[175](index=175&type=chunk) - Growing costs for other agribusiness increased by **$1.0 million** in Q2 fiscal year 2022[175](index=175&type=chunk) [Corporate and Other](index=50&type=section&id=Corporate%20and%20Other) Corporate and other revenues increased, while costs and expenses also rose, keeping the operating loss relatively stable Corporate and Other Segment Performance (Three Months Ended April 30, in thousands) | Corporate and Other | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------------ | :----------- | :----------- | :-------------------- | :--------- | | Revenues | $1,381 | $1,143 | $238 | 21% | | Costs and Expenses | $6,269 | $6,039 | $230 | 4% | | Operating Income (Loss) | $(5,184) | $(5,163) | $(21) | (0)% | [Six Months Ended April 30, 2022 Compared to the Six Months Ended April 30, 2021](index=50&type=section&id=Six%20Months%20Ended%20April%2030%2C%202022%20Compared%20to%20the%20Six%20Months%20Ended%20April%2030%2C%202021_segment) For the six-month period, strong avocado performance was offset by a sharp decline in Fresh Lemons operating income and a loss in Other Agribusiness [Fresh Lemons](index=50&type=section&id=Fresh%20Lemons_6M) Fresh lemons revenue decreased 2% while costs rose 2%, leading to a significant 68% decline in operating income Fresh Lemons Segment Performance (Six Months Ended April 30, in thousands) | Fresh Lemons | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------- | :----------- | :----------- | :-------------------- | :--------- | | Total Net Revenues | $60,592 | $61,900 | $(1,308) | (2)% | | Costs and Expenses | $59,383 | $58,136 | $1,247 | 2% | | Operating Income (Loss) | $1,209 | $3,764 | $(2,555) | (68)% | - Third-party grower and supplier costs for fresh lemons increased by **$1.5 million** in the first six months of fiscal year 2022[181](index=181&type=chunk) [Lemon Packing](index=51&type=section&id=Lemon%20Packing_6M) Lemon packing revenue grew 6%, but a 9% cost increase due to inflation and supply chain issues resulted in a slight operating income decline Lemon Packing Segment Performance (Six Months Ended April 30, in thousands) | Lemon Packing | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------ | :----------- | :----------- | :-------------------- | :--------- | | Total Net Revenues | $28,673 | $26,967 | $1,706 | 6% | | Costs and Expenses | $22,218 | $20,405 | $1,813 | 9% | | Operating Income (Loss) | $6,455 | $6,562 | $(107) | (2)% | | Operating income per carton sold | $2.34 | $2.30 | $0.04 | 2% | - Increased costs for labor, cardboard, fruit treatments, and packing/shipping supplies from **inflation and supply chain issues** drove up packing costs[184](index=184&type=chunk) [Avocados](index=51&type=section&id=Avocados_6M) The avocado segment delivered strong growth, with a 60% revenue increase driving a 53% rise in operating income despite higher costs Avocados Segment Performance (Six Months Ended April 30, in thousands) | Avocados | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :--------- | :----------- | :----------- | :-------------------- | :--------- | | Revenues | $4,342 | $2,707 | $1,635 | 60% | | Costs and Expenses | $2,394 | $1,433 | $961 | 67% | | Operating Income (Loss) | $1,948 | $1,274 | $674 | 53% | - Harvest costs for avocados increased by **$0.2 million**, and growing costs increased by **$0.8 million** in the first six months of fiscal year 2022[186](index=186&type=chunk) [Other Agribusiness](index=51&type=section&id=Other%20Agribusiness_6M) Other agribusiness revenue grew 5%, but a 32% surge in costs pushed the segment from an operating profit to a loss Other Agribusiness Segment Performance (Six Months Ended April 30, in thousands) | Other Agribusiness | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :----------------- | :----------- | :----------- | :-------------------- | :--------- | | Total Net Revenues | $5,807 | $5,519 | $288 | 5% | | Costs and Expenses | $6,438 | $4,876 | $1,562 | 32% | | Operating Income (Loss) | $(631) | $643 | $(1,274) | (198)% | - Orange revenues increased by **$1.0 million**, while specialty citrus revenues decreased by **$0.7 million** in the first six months of fiscal year 2022[186](index=186&type=chunk) - Growing costs for other agribusiness increased by **$1.0 million**, and purchased fruit costs increased by **$0.7 million** in the first six months of fiscal year 2022[186](index=186&type=chunk) [Corporate and Other](index=52&type=section&id=Corporate%20and%20Other_6M) Corporate and other revenues increased, but higher costs led to a slightly larger operating loss for the six-month period Corporate and Other Segment Performance (Six Months Ended April 30, in thousands) | Corporate and Other | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :------------------ | :----------- | :----------- | :-------------------- | :--------- | | Revenues | $2,572 | $2,281 | $291 | 13% | | Costs and Expenses | $13,562 | $12,727 | $835 | 7% | | Operating Income (Loss) | $(11,581) | $(11,002) | $(579) | (5)% | [Seasonal Operations](index=52&type=section&id=Seasonal%20Operations) Agribusiness operations are seasonal, with revenue and cost fluctuations throughout the fiscal year based on crop cycles - Agribusiness operations are seasonal, with cultural costs higher in the first and second quarters and harvest costs peaking in the third quarter[189](index=189&type=chunk) [Results of Operations for the Trailing Twelve Months Ended April 30, 2022 and 2021](index=53&type=section&id=Results%20of%20Operations%20for%20the%20Trailing%20Twelve%20Months%20Ended%20April%2030%2C%202022%20and%202021) On a trailing twelve-month basis, revenue and costs both increased by 1%, resulting in a slight improvement in the operating loss Results of Operations (Trailing Twelve Months Ended April 30, in thousands) | Metric | Apr 30, 2022 | Apr 30, 2021 | Change (in thousands) | Change (%) | | :----- | :----------- | :----------- | :-------------------- | :--------- | | Total Revenues | $168,644 | $166,739 | $1,905 | 1% | | Total Costs and Expenses | $178,693 | $177,704 | $989 | 1% | | Operating Loss | $(10,049) | $(10,965) | $916 | 8% | | Net Loss Attributable to Limoneira Company | $(6,123) | $(7,400) | $1,277 | 17% | - The increase in agribusiness costs was primarily due to higher growing and third-party grower and supplier fruit costs, partially offset by decreased packing and harvest costs[192](index=192&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company relies on cash from operations and its credit facility for liquidity and expects these sources to be sufficient for the next year - Primary liquidity sources are cash from operations and the Farm Credit West Credit Facility[193](index=193&type=chunk)[199](index=199&type=chunk) - The company believes current liquidity will be sufficient to meet capital expenditures, debt service, working capital, and other obligations for the next twelve months[195](index=195&type=chunk) Cash Flow Summary (Six Months Ended April 30, in thousands) | Cash Flow | Apr 30, 2022 | Apr 30, 2021 | Change | | :---------- | :----------- | :----------- | :----- | | Net cash (used in) provided by operating activities | $(1,160) | $4,643 | $(5,803) | | Net cash provided by financing activities | $2,326 | $1,908 | $418 | [Overview](index=54&type=section&id=Overview_liquidity) Liquidity needs fluctuate seasonally, with the company using its revolving credit facility to fund agricultural and real estate activities - Liquidity and capital position fluctuate seasonally, with higher working capital demand in the first and last fiscal quarters[193](index=193&type=chunk) - The company utilizes its revolving credit facility to fund agricultural inputs and real estate development projects[193](index=193&type=chunk) - The defined benefit pension plan was **terminated effective December 31, 2021**[194](index=194&type=chunk) [Cash Flows from Operating Activities](index=54&type=section&id=Cash%20Flows%20from%20Operating%20Activities) Net cash used in operating activities was $1.2 million, a reversal from the prior year due to a higher net loss and working capital changes Operating Cash Flow (Six Months Ended April 30, in thousands) | Operating Cash Flow | Apr 30, 2022 | Apr 30, 2021 | Change | | :------------------ | :----------- | :----------- | :----- | | Net cash (used in) provided by operating activities | $(1,160) | $4,643 | $(5,803) | - The shift to net cash used in operating activities was driven by an increased net loss and changes in accounts receivable, cultural costs, and prepaid expenses[197](index=197&type=chunk) [Cash Flows from Investing Activities](index=54&type=section&id=Cash%20Flows%20from%20Investing%20Activities) Net cash used in investing activities decreased significantly to $0.4 million, reflecting lower capital expenditures Investing Cash Flow (Six Months Ended April 30, in thousands) | Investing Cash Flow | Apr 30, 2022 | Apr 30, 2021 | Change | | :------------------ | :----------- | :----------- | :----- | | Net cash used in investing activities | $(442) | $(5,501) | $5,059 | | Capital expenditures | $4,123 | $5,409 | $(1,286) | [Cash Flows from Financing Activities](index=55&type=section&id=Cash%20Flows%20from%20Financing%20Activities) Net cash from financing activities increased to $2.3 million, driven by higher net borrowings on long-term debt Financing Cash Flow (Six Months Ended April 30, in thousands) | Financing Cash Flow | Apr 30, 2022 | Apr 30, 2021 | Change | | :------------------ | :----------- | :----------- | :----- | | Net cash provided by financing activities | $2,326 | $1,908 | $418 | | Net borrowings of long-term debt | $6,485 | $5,510 | $975 | | Dividends paid – common | $(2,653) | $(2,651) | $(2) | | Dividends paid – preferred | $(251) | $(251) | $0 | [Transactions Affecting Liquidity and Capital Resources](index=55&type=section&id=Transactions%20Affecting%20Liquidity%20and%20Capital%20Resources) The company maintains a $130 million credit facility and a $10 million share repurchase program while continuing to pay dividends - The Farm Credit West Credit Facility provides **$130 million** in aggregate borrowing capacity, with **$10.9 million available** as of April 30, 2022[201](index=201&type=chunk) - The company expects to comply with its debt service coverage ratio covenant of **1.25:1.0** by October 31, 2022[202](index=202&type=chunk) - A **$10 million share repurchase program** was approved in fiscal year 2021, but no shares have been repurchased to date[204](index=204&type=chunk) Dividends Paid (Six Months Ended April 30, in thousands) | Dividends Paid | Apr 30, 2022 | Apr 30, 2021 | Change | | :------------- | :----------- | :----------- | :----- | | Preferred dividends | $251 | $251 | $0 | | Common dividends | $2,653 | $2,651 | $2 | [Off-Balance Sheet Arrangements](index=56&type=section&id=Off-Balance%20Sheet%20Arrangements) The company holds investments in joint ventures and partnerships that are accounted for using the equity method - The company holds investments in joint ventures and partnerships accounted for using the equity method[206](index=206&type=chunk) [Critical Accounting Estimates](index=56&type=section&id=Critical%20Accounting%20Estimates) There have been no material changes to the company's critical accounting policies and estimates since its last annual report - Critical accounting policies and estimates have not materially changed since the October 31, 2021, Annual Report on Form 10-K[207](index=207&type=chunk) [Recent Accounting Pronouncements](index=56&type=section&id=Recent%20Accounting%20Pronouncements) Information regarding recent accounting pronouncements is detailed in Note 2 to the consolidated financial statements - Refer to Note 2 for details on recent accounting pronouncements[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes in the company's market risk disclosures since its fiscal year 2021 annual report - No material changes in quantitative and qualitative disclosures about market risk since the October 31, 2021, Annual Report on Form 10-K[210](index=210&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed effective, with no material changes to internal controls during the period - Disclosure controls and procedures were **effective** as of April 30, 2022[211](index=211&type=chunk) - **No material changes** in internal control over financial reporting occurred during the period[212](index=212&type=chunk) - Control systems have inherent limitations, providing reasonable but not absolute assurance[213](index=213&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is provided in Note 16 to the consolidated financial statements - Legal proceedings information is incorporated by reference from Note 16 of the financial statements[215](index=215&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the company's fiscal year 2021 annual report - No material changes in risk factors since the October 31, 2021, Annual Report on Form 10-K[216](index=216&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company acquired shares from a retired employee for tax purposes but made no repurchases under its public buyback program Issuer Purchases of Equity Securities (Q2 Fiscal Year 2022) | Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | | :----- | :------------------------------- | :------------------------------------ | :------------------------------------------------------------------------------------------------------- | | Feb 1, 2022 - Feb 28, 2022 | 12,718 | $14.69 | — | | Total | 12,718 | | $10,000,000 (remaining authorization) | - Shares were acquired from a retired employee for payroll taxes related to restricted stock vesting, not under the public repurchase program[217](index=217&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - No defaults upon senior securities[219](index=219&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[219](index=219&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this period - No other information to report[220](index=220&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents and required certifications - The exhibits include corporate organizational documents, stock-related agreements, and certifications required by the Exchange Act[221](index=221&type=chunk)[222](index=222&type=chunk) SIGNATURES [Signatures](index=61&type=section&id=SIGNATURES_details) The report was duly signed by the company's Chief Executive Officer and Chief Financial Officer on June 7, 2022 - The report was signed by the CEO and CFO on **June 7, 2022**[226](index=226&type=chunk)

Financial Data and Key Metrics Changes - Total net revenue for Q1 2022 was $39.3 million, a 3% increase from $38.3 million in Q1 2021 [10][21] - Agribusiness revenue was $38.1 million, up from $37.1 million in the same period last year [12][21] - Operating loss increased to $9.6 million in Q1 2022 from a loss of $5.6 million in Q1 2021 [28] - Net loss applicable to common stock was $6.6 million, compared to a net loss of $4.3 million in the prior year [28] - Adjusted net loss was $6.2 million, compared to a loss of $4.4 million in the same period last year [29] Business Line Data and Key Metrics Changes - Fresh lemon sales generated $24.7 million in Q1 2022, down from $25 million in Q1 2021, with an average price per carton of $20.48 compared to $18.91 [12][22] - Avocado revenue was $800,000 in Q1 2022, compared to no revenue in the same period last year, with 365,000 pounds sold at an average price of $2.10 per pound [15][24] - Orange revenue decreased to $900,000 from $1.1 million year-over-year, with 53,000 cartons sold at an average price of $16.42 [15][25] - Specialty citrus and other crop revenues decreased to $900,000 from $1.8 million in the prior year [26] Market Data and Key Metrics Changes - The lemon industry is facing an oversupply due to larger tree crops in California and Arizona, and reduced demand from Asian markets, operating at about 50% of pre-COVID levels [13][14] - The overall tree crop is estimated to be about 25% larger year-on-year, equating to approximately 10 million additional cartons [63] Company Strategy and Development Direction - The company is raising its avocado volume guidance for FY 2022 from 5 million to 6 million pounds to 6 million to 7 million pounds [32] - The real estate development project, Harvest at Limoneira, is expected to generate $95 million in cash flow, up from a previous estimate of $80 million, due to land value appreciation [17][34] - The company is expanding its product offerings through the One World of Citrus program to attract more customers [33] Management's Comments on Operating Environment and Future Outlook - Management expects continued top and bottom line growth for the remaining nine months of FY 2022 despite challenges from supply chain inflation and oversupply [31] - Lemon pricing is expected to remain pressured until the Asian export market recovers [32] - The company is optimistic about improved domestic demand and anticipates a return to pre-pandemic growth levels in Asian markets [101] Other Important Information - The company recorded approximately $770,000 in one-time severance costs related to the departure of a senior executive [27] - Long-term debt increased to $142.1 million as of January 31, 2022, from $130.4 million at the end of FY 2021 [30] Q&A Session Summary Question: Impact of supply chain costs on lemon pricing and margin recovery - Management acknowledged that inflationary pressures are challenging margins, compounded by oversupply and reduced demand due to the pandemic [41][42] Question: Cash flow expectations from Harvest at Limoneira - The company indicated that land value appreciation and new development opportunities could lead to further increases in cash flow expectations [45][50] Question: Supply-demand dynamics between California crop increase and Asian demand shortfall - Management estimated that California's crop is about 25% larger year-on-year, while Asian demand has decreased by approximately 5 million cartons [63][64] Question: Water rights and monetization opportunities - The company is exploring ways to monetize water rights, including a fallowing program that allows water to be used for other purposes [79][81] Question: Volume impact of Argentinian fruit not going to Russia - Management noted that the volume impact is uncertain, but they handled about 20% of all imported fruit from Argentina last year, equating to around 1 million cartons [91][92]

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 LIMONEIRA COMPANY FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2022 (Exact name of registrant as specified in its charter) 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: 001-34755 Delaware 77-0260692 (State or other jurisdiction of incor ...

Limoneira Company (NASDAQ:LMNR) Q4 2021 Results Conference Call January 10, 2022 4:30 PM ET Company Participants John Mills - Managing Partner, ICR Harold Edwards - President and CEO Mark Palamountain - CFO Conference Call Participants Ben Bienvenu - Stephens Gerry Sweeney - Roth Capital Partners Ben Klieve - Lake Street Capital Markets Eric Larson - Seaport Research Partners Operator Greetings, and welcome to the Limoneira Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in ...

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: 001-34755 LIMONEIRA COMPANY (Exact name of registrant as specified in its charter) Delaware 77-0260692 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer ...

| --- | --- | --- | |-------|----------|-------| | | | | | | | | | | | | | | | | | | | | | — | IMONEIRA | | | | | | | | | | Cautionary Statement 2 Forward-Looking Statements This presentation contains forward-looking statements, including guidance for fiscal year 2021 and beyond, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Limoneira's current expectations about f ...

Limoneira Company (NASDAQ:LMNR) Q3 2021 Results Conference Call September 8, 2021 4:30 PM ET Company Participants John Mills - Managing Partner, ICR Harold Edwards - President and CEO Mark Palamountain - CFO Conference Call Participants Ben Bienvenu - Stephens Vincent Anderson - Stifel Ben Klieve - Lake Street Capital Markets Gerry Sweeney - Roth Capital Partners Operator Greetings, and welcome to the Limoneira Third Quarter Fiscal Year 2021 Financial Results. At this time, all participants are in a listen- ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, with detailed notes on accounting policies and financial results [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20%E2%80%93%20July%2031%2C%202021%20and%20October%2031%2C%202020) This table summarizes the company's financial position, detailing assets, liabilities, and equity at specific dates Consolidated Balance Sheet Summary | Metric | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Total Assets | 388,270 | 389,600 | (1,330) | (0.34)% | | Total Liabilities | 184,475 | 183,030 | 1,445 | 0.79% | | Total Stockholders' Equity | 192,985 | 195,760 | (2,775) | (1.42)% | | Cash | 775 | 501 | 274 | 54.69% | | Total Current Assets | 37,534 | 42,520 | (4,986) | (11.73)% | | Total Current Liabilities | 33,640 | 31,461 | 2,179 | 6.93% | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20%E2%80%93%20three%20and%20nine%20months%20ended%20July%2031%2C%202021%20and%202020) This table presents the company's revenues, expenses, and net income (loss) for the reported periods Consolidated Statements of Operations (3 Months) | Metric | 3 Months Ended July 31, 2021 ($ thousands) | 3 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Total Net Revenues | 49,125 | 53,559 | (4,434) | (8.28)% | | Operating Income (Loss) | 3,374 | 1,814 | 1,560 | 85.99% | | Net Income (Loss) | 3,170 | 1,800 | 1,370 | 76.11% | | Net Income (Loss) attributable to Limoneira Company | 3,705 | 2,309 | 1,396 | 60.46% | | Basic EPS | 0.20 | 0.12 | 0.08 | 66.67% | | Diluted EPS | 0.20 | 0.12 | 0.08 | 66.67% | Consolidated Statements of Operations (9 Months) | Metric | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Total Net Revenues | 132,532 | 134,786 | (2,254) | (1.67)% | | Operating Income (Loss) | 118 | (9,485) | 9,603 | 101.24% | | Net Income (Loss) | 767 | (10,410) | 11,177 | 107.37% | | Net Income (Loss) attributable to Limoneira Company | 1,430 | (9,001) | 10,431 | 115.89% | | Basic EPS | 0.06 | (0.54) | 0.60 | 111.11% | | Diluted EPS | 0.06 | (0.54) | 0.60 | 111.11% | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29%20%E2%80%93%20three%20and%20nine%20months%20ended%20July%2031%2C%202021%20and%202020) This table outlines the company's net income (loss) and other comprehensive income (loss) components for the reported periods Consolidated Statements of Comprehensive Income (Loss) (3 Months) | Metric | 3 Months Ended July 31, 2021 ($ thousands) | 3 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Net Income (Loss) | 3,170 | 1,800 | 1,370 | 76.11% | | Foreign currency translation adjustments | (1,042) | 1,410 | (2,452) | (173.90)% | | Total other comprehensive (loss) income, net of tax | (907) | 1,545 | (2,452) | (158.71)% | | Comprehensive income (loss) | 2,263 | 3,345 | (1,082) | (32.35)% | Consolidated Statements of Comprehensive Income (Loss) (9 Months) | Metric | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Net Income (Loss) | 767 | (10,410) | 11,177 | 107.37% | | Foreign currency translation adjustments | 330 | (476) | 806 | 169.33% | | Total other comprehensive (loss) income, net of tax | 733 | (6) | 739 | 12316.67% | | Comprehensive income (loss) | 1,500 | (10,416) | 11,916 | 114.40% | [Consolidated Statements of Stockholders' Equity and Temporary Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20and%20Temporary%20Equity%20%E2%80%93%20three%20and%20nine%20months%20ended%20July%2031%2C%202021%20and%202020) This table details changes in stockholders' equity, including retained earnings and additional paid-in capital, over the reported periods Consolidated Stockholders' Equity Summary | Metric | October 31, 2020 ($ thousands) | July 31, 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :---------------------------- | :------------------- | :--------- | | Total Stockholders' Equity | 195,760 | 192,985 | (2,775) | (1.42)% | | Retained Earnings | 30,797 | 27,874 | (2,923) | (9.49)% | | Additional Paid-In Capital | 162,084 | 163,460 | 1,376 | 0.85% | | Accumulated Other Comprehensive Loss | (7,548) | (6,815) | 733 | (9.71)% | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20nine%20months%20ended%20July%2031%2C%202021%20and%202020) This table presents the company's cash flows from operating, investing, and financing activities for the reported periods Consolidated Cash Flow Summary | Metric | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Net cash provided by (used in) operating activities | 16,802 | (11,394) | 28,196 | 247.46% | | Net cash (used in) provided by investing activities | (8,716) | 254 | (8,970) | (3531.50)% | | Net cash (used in) provided by financing activities | (7,809) | 11,479 | (19,288) | (168.04)% | | Net increase in cash | 274 | 262 | 12 | 4.58% | | Cash at end of period | 775 | 878 | (103) | (11.73)% | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, financial statement line items, and other relevant disclosures [1. Organization and Basis of Presentation](index=11&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) This note describes the company's primary business activities and the basis for financial statement preparation - Limoneira Company's primary business is agribusiness, focusing on citrus (lemons, oranges, specialty citrus) and avocados, including packing, marketing, and selling lemons. The company also engages in residential rentals and real estate development[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies adopted by the company, including recent pronouncement impacts - The company adopted FASB ASU 2016-13 (Credit Losses) effective **November 1, 2020**, which did not materially impact its financial statements[39](index=39&type=chunk)[40](index=40&type=chunk) - The company is evaluating FASB ASU 2020-06 (Convertible Instruments), effective for fiscal years beginning after **December 15, 2021**, to determine its potential effect on consolidated financial statements[41](index=41&type=chunk)[42](index=42&type=chunk) [3. Concentrations and Geographic Information](index=13&type=section&id=3.%20Concentrations%20and%20Geographic%20Information) This note details significant customer and supplier concentrations and geographic revenue distribution - Lemons procured from third-party growers constituted **51%** of the Company's lemon supply for the nine months ended July 31, 2021, down from **60%** in the prior year[44](index=44&type=chunk) - Two individual customers represented **17%** and **13%** of revenues, respectively, for the nine months ended July 31, 2021[45](index=45&type=chunk) - Total sales in Argentina by Trapani Fresh decreased significantly from **$12.105 million** in the nine months ended July 31, 2020, to **$3.265 million** in the same period of 2021, following an agreement to sell and license certain assets to FGF[47](index=47&type=chunk) [4. Prepaid Expenses and Other Current Assets](index=13&type=section&id=4.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This table provides a breakdown of prepaid expenses and other current assets Prepaid Expenses and Other Current Assets Details | Item | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Prepaid supplies and insurance | 2,634 | 2,080 | 554 | 26.63% | | Note receivable and related interest | 2,446 | 2,490 | (44) | (1.77)% | | Real estate development held for sale | 2,543 | 2,543 | 0 | 0.00% | | Sales tax receivable | 807 | 1,867 | (1,060) | (56.77)% | | Lemon supplier advances and other | 1,789 | 1,708 | 81 | 4.74% | | Total | 10,219 | 10,688 | (469) | (4.39)% | [5. Real Estate Development](index=13&type=section&id=5.%20Real%20Estate%20Development) This note details the company's real estate development assets and related activities Real Estate Development Assets | Item | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Retained Property - East Area I | 13,011 | 13,169 | (158) | (1.20)% | | East Area II | 9,240 | 8,467 | 773 | 9.13% | | Total | 22,251 | 21,636 | 615 | 2.84% | - The Limoneira Lewis Community Builders, LLC (LLCB) joint venture has closed sales for **556 residential units** through July 31, 2021[58](index=58&type=chunk) - The company expects to sell its Sevilla property for **$2.7 million** in calendar year 2021, with an immaterial gain expected upon closing[59](index=59&type=chunk) [6. Equity in Investments](index=17&type=section&id=6.%20Equity%20in%20Investments) This table presents the company's equity method investments and their financial contributions Equity in Investments Summary | Investment | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Limoneira Lewis Community Builders, LLC | 59,844 | 57,142 | 2,702 | 4.73% | | Limco Del Mar, Ltd. | 2,027 | 1,920 | 107 | 5.57% | | Rosales | 1,066 | 1,641 | (575) | (35.04)% | | Romney Property Partnership | 509 | 511 | (2) | (0.39)% | | Total | 63,446 | 61,214 | 2,232 | 3.65% | LLCB Financials | LLCB Financials | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Revenues | 36,684 | 25,716 | 10,968 | 42.65% | | Net income attributable to Limoneira Company | 3,944 | 1,659 | 2,285 | 137.73% | [7. Goodwill and Intangible Assets, Net](index=17&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets%2C%20Net) This table details the company's goodwill and net intangible assets Goodwill and Intangible Assets | Item | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Goodwill | 1,539 | 1,535 | 4 | 0.26% | | Intangible assets, net | 8,680 | 11,309 | (2,629) | (23.25)% | - The company acquired additional water rights in Chile for **$186,000** during the nine months ended July 31, 2021[66](index=66&type=chunk) [8. Other Assets](index=19&type=section&id=8.%20Other%20Assets) This table provides a breakdown of other non-current assets Other Assets Details | Item | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Investments in Mutual Water Companies | 5,990 | 5,563 | 427 | 7.68% | [9. Accrued Liabilities](index=19&type=section&id=9.%20Accrued%20Liabilities) This table details the company's accrued liabilities at specific dates Accrued Liabilities Details | Item | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Compensation | 2,295 | 2,275 | 20 | 0.88% | | Property taxes | 196 | 683 | (487) | (71.30)% | | Lemon and orange supplier payables | — | 1,346 | (1,346) | (100.00)% | | Operating expenses | 1,452 | 938 | 514 | 54.80% | | Leases | 315 | 959 | (644) | (67.15)% | | Other | 1,381 | 1,746 | (365) | (20.91)% | | Total | 5,639 | 7,947 | (2,308) | (29.04)% | [10. Long-Term Debt](index=20&type=section&id=10.%20Long-Term%20Debt) This note outlines the company's long-term debt, including new agreements and covenant modifications Long-Term Debt Summary | Item | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Total long-term debt, net | 123,171 | 125,848 | (2,677) | (2.13)% | | Long-term debt, less current portion | 120,935 | 122,571 | (1,636) | (1.33)% | - The company entered into a new Master Loan Agreement (MLA) with Farm Credit West in June 2021, extending the principal repayment to **July 1, 2026**[75](index=75&type=chunk)[207](index=207&type=chunk) - In August 2021, the debt service coverage ratio covenant was modified to a minimum of **1.0:1.0** measured at October 31, 2021, from the previous **1.15:1.00**[83](index=83&type=chunk)[214](index=214&type=chunk) [11. Leases](index=21&type=section&id=11.%20Leases) This table presents the company's operating and variable lease revenues and costs Lease Revenue | Item | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Operating lease revenue | 3,215 | 3,235 | (20) | (0.62)% | | Variable lease revenue | 237 | 242 | (5) | (2.07)% | | Total lease revenue | 3,452 | 3,477 | (25) | (0.72)% | Lease Costs | Item | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Operating lease costs (lessee) | 406 | 417 | (11) | (2.64)% | [12. Basic and Diluted Net Income (Loss) per Share](index=23&type=section&id=12.%20Basic%20and%20Diluted%20Net%20Income%20%28Loss%29%20per%20Share) This table presents the basic and diluted net income (loss) per common share for the reported periods Earnings Per Share (3 Months) | Metric | 3 Months Ended July 31, 2021 | 3 Months Ended July 31, 2020 | Change | Change (%) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :------- | :--------- | | Basic net income (loss) per common share | $0.20 | $0.12 | $0.08 | 66.67% | | Diluted net income (loss) per common share | $0.20 | $0.12 | $0.08 | 66.67% | Earnings Per Share (9 Months) | Metric | 9 Months Ended July 31, 2021 | 9 Months Ended July 31, 2020 | Change | Change (%) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :------- | :--------- | | Basic net income (loss) per common share | $0.06 | $(0.54) | $0.60 | 111.11% | | Diluted net income (loss) per common share | $0.06 | $(0.54) | $0.60 | 111.11% | [13. Related-Party Transactions](index=23&type=section&id=13.%20Related-Party%20Transactions) This note describes the company's ongoing transactions with related parties - The company has ongoing related-party transactions with entities such as mutual water companies, Calavo, and FGF, involving various operational and financial exchanges[96](index=96&type=chunk)[99](index=99&type=chunk)[102](index=102&type=chunk) [14. Income Taxes](index=25&type=section&id=14.%20Income%20Taxes) This note explains the company's effective tax rate and its components - The effective tax rate for the nine months ended July 31, 2021, exceeded the **21%** federal statutory rate due to foreign taxes, state taxes, and nondeductible items[103](index=103&type=chunk) [15. Retirement Plans](index=25&type=section&id=15.%20Retirement%20Plans) This note details the company's defined benefit pension plan and related costs Net Periodic Benefit Cost | Metric | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Net periodic benefit cost | 498 | 534 | (36) | (6.74)% | - The Limoneira Company Retirement Plan, a defined benefit pension plan, was frozen in **June 2004**, with no additional benefits accruing to participants since then[104](index=104&type=chunk) [16. Commitments and Contingencies](index=27&type=section&id=16.%20Commitments%20and%20Contingencies) This note addresses potential legal and other commitments and contingencies - The company is not aware of any pending or threatened litigation that is expected to have a material adverse effect on its business, financial condition, liquidity, or operating results[109](index=109&type=chunk) [17. Stock-based Compensation and Treasury Stock](index=27&type=section&id=17.%20Stock-based%20Compensation%20and%20Treasury%20Stock) This note details stock-based compensation grants and share repurchase activities - In December 2020, the company granted **95,000 shares** of common stock to key executives under the Stock Plan, with a related compensation expense of approximately **$1.45 million** to be recognized over three years[112](index=112&type=chunk) - The share repurchase program, authorizing up to **$10 million**, expired in March 2021. During fiscal year 2020, the company repurchased **250,977 shares** for approximately **$3.493 million**[117](index=117&type=chunk) [18. Segment Information](index=29&type=section&id=18.%20Segment%20Information) This table provides financial information broken down by the company's operating segments Agribusiness Segment Revenues and Operating Income | Segment | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Fresh Lemons Revenues | 98,195 | 100,231 | (2,036) | (2.03)% | | Lemon Packing Revenues | 38,699 | 43,641 | (4,942) | (11.32)% | | Avocados Revenues | 6,780 | 8,323 | (1,543) | (18.54)% | | Other Agribusiness Revenues | 8,565 | 11,003 | (2,438) | (22.16)% | | Total Agribusiness Revenues | 129,080 | 131,309 | (2,229) | (1.70)% | | Total Agribusiness Operating Income | 15,009 | 5,991 | 9,018 | 150.53% | [19. Subsequent Events](index=30&type=section&id=19.%20Subsequent%20Events) This note discloses events occurring after the balance sheet date that may affect financial statements - No other subsequent events requiring recognition or disclosure were identified after July 31, 2021, through the filing date[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, liquidity, capital resources, and critical accounting policies [Overview](index=31&type=section&id=Overview) This section describes the company's business divisions, land and water resources, and the impact of drought conditions - Limoneira Company manages approximately **15,400 acres** of land and water resources, primarily for citrus and avocado cultivation[127](index=127&type=chunk) - The company is one of the largest growers of lemons and avocados in the United States[128](index=128&type=chunk)[132](index=132&type=chunk) - The company's business is divided into three divisions: agribusiness (farming, harvesting, packing, sales), rental operations (residential, commercial, leased land, organic recycling), and real estate development[131](index=131&type=chunk) - California is experiencing exceptional drought conditions as of July 31, 2021, with federal officials allocating only **5%** of contracted water to San Joaquin Valley farmers in 2021, down from **100%** in 2017-2020. The company is assessing the impact on its California orchards[141](index=141&type=chunk) - The U.S. Bureau of Reclamation declared a Level 1 Shortage Condition at Lake Mead, reducing Arizona's water releases by approximately **18%** starting **January 1, 2022**, which the company is assessing for its Arizona orchards[142](index=142&type=chunk) [COVID-19 Pandemic](index=35&type=section&id=COVID-19%20Pandemic) This section discusses the pandemic's impact on market conditions, sales, profitability, and the company's mitigation strategies - The COVID-19 pandemic caused a significant decline in U.S. lemon market volume and export demand, leading to market oversupply[152](index=152&type=chunk) - The pandemic negatively impacted the company's sales and profitability in the last three quarters of fiscal year 2020 and the first three quarters of fiscal year 2021, with material impacts expected to continue, but improvement is anticipated in fiscal year 2022[153](index=153&type=chunk) - The company took proactive actions to protect employee health, allowed remote work, and implemented liquidity improvement measures such as postponing capital expenditures, selling equity securities, and reducing operating costs[154](index=154&type=chunk)[155](index=155&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, costs, and operating income, for the reported periods Overall Results of Operations (9 Months) | Metric | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Total Net Revenues | 132,532 | 134,786 | (2,254) | (1.67)% | | Total Costs and Expenses | 132,414 | 144,271 | (11,857) | (8.22)% | | Operating Income (Loss) | 118 | (9,485) | 9,603 | 101.24% | | Total Other Income (Expense) | 1,771 | (6,801) | 8,572 | 126.04% | | Net Income (Loss) attributable to Limoneira Company | 1,430 | (9,001) | 10,431 | 115.89% | Adjusted EBITDA (9 Months) | Metric | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Adjusted EBITDA | 10,805 | 835 | 9,970 | 1194.01% | [Three Months Ended July 31, 2021 Compared to the Three Months Ended July 31, 2020](index=37&type=section&id=Three%20Months%20Ended%20July%2031%2C%202021%20Compared%20to%20the%20Three%20Months%20Ended%20July%2031%2C%202020) This section compares agribusiness revenues and costs for the three-month periods Agribusiness Revenues (3 Months) | Agribusiness Revenues | 3 Months Ended July 31, 2021 ($ thousands) | 3 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Lemons | 40,835 | 43,234 | (2,399) | (5.55)% | | Avocados | 4,073 | 6,133 | (2,060) | (33.59)% | | Oranges | 1,981 | 2,232 | (251) | (11.25)% | | Specialty citrus and other crops | 1,065 | 788 | 277 | 35.15% | | Total Agribusiness Revenues | 47,954 | 52,387 | (4,433) | (8.46)% | Agribusiness Costs & Expenses (3 Months) | Agribusiness Costs & Expenses | 3 Months Ended July 31, 2021 ($ thousands) | 3 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Packing costs | 9,864 | 16,993 | (7,129) | (41.95)% | | Harvest costs | 3,383 | 6,698 | (3,315) | (49.49)% | | Growing costs | 7,522 | 6,237 | 1,285 | 20.60% | | Third-party grower costs | 17,828 | 14,627 | 3,201 | 21.88% | | Total Agribusiness Costs & Expenses | 40,691 | 46,826 | (6,135) | (13.10)% | [Nine Months Ended July 31, 2021 Compared to the Nine Months Ended July 31, 2020](index=39&type=section&id=Nine%20Months%20Ended%20July%2031%2C%202021%20Compared%20to%20the%20Nine%20Months%20Ended%20July%2031%2C%202020) This section compares agribusiness revenues and costs for the nine-month periods Agribusiness Revenues (9 Months) | Agribusiness Revenues | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Lemons | 113,735 | 111,983 | 1,752 | 1.56% | | Avocados | 6,780 | 8,323 | (1,543) | (18.54)% | | Oranges | 4,476 | 7,171 | (2,695) | (37.58)% | | Specialty citrus and other crops | 4,089 | 3,832 | 257 | 6.71% | | Total Agribusiness Revenues | 129,080 | 131,309 | (2,229) | (1.70)% | Agribusiness Costs & Expenses (9 Months) | Agribusiness Costs & Expenses | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Packing costs | 31,894 | 37,279 | (5,385) | (14.44)% | | Harvest costs | 13,826 | 17,550 | (3,724) | (21.22)% | | Growing costs | 22,348 | 22,828 | (480) | (2.10)% | | Third-party grower costs | 39,412 | 40,946 | (1,534) | (3.75)% | | Total Agribusiness Costs & Expenses | 114,071 | 125,318 | (11,247) | (8.97)% | [Segment Results of Operations](index=42&type=section&id=Segment%20Results%20of%20Operations) This table presents operating income (loss) by business segment Segment Operating Income (Loss) (9 Months) | Segment Operating Income (Loss) | 9 Months Ended July 31, 2021 ($ thousands) | 9 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Fresh Lemons | 8,213 | (775) | 8,988 | 1160.00% | | Lemon Packing | 9,015 | 8,716 | 299 | 3.43% | | Avocados | 2,639 | 3,752 | (1,113) | (29.66)% | | Other Agribusiness | 1,733 | 1,013 | 720 | 71.08% | [Results of Operations for the Trailing Twelve Months Ended July 31, 2021 and 2020](index=47&type=section&id=Results%20of%20Operations%20for%20the%20Trailing%20Twelve%20Months%20Ended%20July%2031%2C%202021%20and%202020) This table presents the company's financial performance for the trailing twelve-month periods Results of Operations (Trailing 12 Months) | Metric | Trailing 12 Months Ended July 31, 2021 ($ thousands) | Trailing 12 Months Ended July 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :------------------- | :--------- | | Total Revenues | 162,305 | 171,262 | (8,957) | (5.23)% | | Total Costs and Expenses | 171,710 | 184,354 | (12,644) | (6.86)% | | Operating Loss | (9,405) | (13,092) | 3,687 | 28.16% | | Total Other Income (Expense) | 1,145 | (7,288) | 8,433 | 115.71% | | Net Loss attributable to Limoneira Company | (6,004) | (12,076) | 6,072 | 50.28% | [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flows, debt, and ability to meet financial obligations - Net cash provided by operating activities was **$16.8 million** for the nine months ended July 31, 2021, a significant improvement from **$11.4 million** used in the prior year[204](index=204&type=chunk)[206](index=206&type=chunk) - Capital expenditures for the nine months ended July 31, 2021, were **$8.3 million**, primarily allocated to orchard and vineyard development (**$8.0 million**) and real estate development projects (**$0.3 million**)[206](index=206&type=chunk) - The company believes that cash flows from operations and available borrowing capacity from existing credit facilities will be sufficient to meet capital expenditures, debt service, working capital, and other contractual obligations for the next twelve months[217](index=217&type=chunk) [Overview](index=48&type=section&id=Overview) This section describes the seasonal fluctuations in the company's liquidity and capital position - The company's liquidity and capital position fluctuates seasonally, with higher cultural costs in Q1/Q2 and peak harvest costs in Q3, funded by revolving credit facilities[203](index=203&type=chunk) [Cash Flows from Operating Activities](index=48&type=section&id=Cash%20Flows%20from%20Operating%20Activities) This section analyzes cash generated or used by the company's core operations - Net cash provided by operating activities was **$16.8 million** for the nine months ended July 31, 2021, a significant improvement from **$11.4 million** used in the prior year, driven by a **$9.6 million** decrease in operating loss and an **$8.6 million** increase in other income[204](index=204&type=chunk)[206](index=206&type=chunk) [Cash Flows from Investing Activities](index=48&type=section&id=Cash%20Flows%20from%20Investing%20Activities) This section analyzes cash used for or provided by investment activities, including capital expenditures - Net cash used in investing activities was **$8.7 million** for the nine months ended July 31, 2021, compared to **$0.3 million** provided in the prior year. Capital expenditures were **$8.3 million**, primarily for orchard and vineyard development[204](index=204&type=chunk)[206](index=206&type=chunk) [Cash Flows from Financing Activities](index=48&type=section&id=Cash%20Flows%20from%20Financing%20Activities) This section analyzes cash flows related to debt, equity, and dividend payments - Net cash used in financing activities was **$7.8 million** for the nine months ended July 31, 2021, primarily due to **$2.8 million** in net long-term debt repayments and **$4.4 million** in common and preferred dividends[205](index=205&type=chunk)[206](index=206&type=chunk) [Transactions Af ecting Liquidity and Capital Resources](index=49&type=section&id=Transactions%20Af%20ecting%20Liquidity%20and%20Capital%20Resources) This section details significant transactions impacting the company's liquidity and capital, including new loan agreements - The company entered into a new Master Loan Agreement (MLA) with Farm Credit West in June 2021, extending principal repayment to **July 1, 2026**, and providing an aggregate borrowing capacity of **$130.0 million**[207](index=207&type=chunk)[210](index=210&type=chunk) - In August 2021, the debt service coverage ratio covenant was modified to a minimum of **1.0:1.0** measured at October 31, 2021[214](index=214&type=chunk) - The company received a **$1.2 million** patronage dividend from Farm Credit West in February 2021, reducing interest expense by **$0.8 million** and real estate development assets by **$0.4 million**[215](index=215&type=chunk) [Contractual Obligations](index=50&type=section&id=Contractual%20Obligations) This section discusses the company's material contractual obligations and any changes - No material changes to contractual obligations were reported, except for the extension of a **$45.0 million** unsecured Line of Credit Loan Agreement for the Limoneira Lewis Community Builders, LLC joint venture to **February 22, 2023**[218](index=218&type=chunk) [Fixed Rate and Variable Rate Debt](index=50&type=section&id=Fixed%20Rate%20and%20Variable%20Rate%20Debt) This section refers to details of the company's debt structure in the financial statement notes - Details of fixed and variable rate long-term debt are provided in the notes to consolidated financial statements[219](index=219&type=chunk) [Of -Balance Sheet Arrangements](index=50&type=section&id=Of%20-Balance%20Sheet%20Arrangements) This section refers to disclosures on joint ventures and partnerships in the annual report - The company has investments in joint ventures and partnerships accounted for using the equity method, as detailed in its fiscal year 2020 Annual Report on Form 10-K[220](index=220&type=chunk) [Inflation](index=50&type=section&id=Inflation) This section discusses the historical and potential impact of inflation on the company's operations - Historically, inflation has not materially affected operations, but significant increases, particularly in Argentina, could adversely impact the business[221](index=221&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section identifies key accounting policies and estimates requiring significant management judgment - Key critical accounting policies include revenue recognition for agribusiness (lemons, avocados, oranges, specialty crops) and rental operations, real estate development cost capitalization, foreign currency translation, income taxes, business combinations, impairment of long-lived assets, and defined benefit retirement plans[222](index=222&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) [Recent Accounting Pronouncements](index=52&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to disclosures on recent accounting pronouncements in the financial statement notes - Information on recent accounting pronouncements is provided in Note 2 to the consolidated financial statements[238](index=238&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section confirms no material changes in market risk disclosures since the prior fiscal year's annual report - No material changes in market risk disclosures were reported compared to the fiscal year 2020 Annual Report on Form 10-K[240](index=240&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and the remediation of a material weakness - The CEO and CFO concluded that disclosure controls and procedures were effective as of **July 31, 2021**[241](index=241&type=chunk) - The material weakness in internal control over financial reporting, previously identified in the fiscal year 2020 Annual Report on Form 10-K, related to journal entries and agribusiness revenues/expenses at an acquired foreign subsidiary, has been remediated[242](index=242&type=chunk)[243](index=243&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms the company is not involved in any material pending or contemplated legal proceedings - The company is not a party to any material pending legal proceedings, nor are any such proceedings contemplated by governmental authorities[248](index=248&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes in risk factors since the prior fiscal year's annual report - No material changes in risk factors were reported compared to the fiscal year 2020 Annual Report on Form 10-K[249](index=249&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds were reported[250](index=250&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities for the period - No defaults upon senior securities were reported[251](index=251&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[252](index=252&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) This section reports no other information for the period - No other information was reported under this item[253](index=253&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate organizational documents, various loan agreements, and certifications from the principal executive and financial officers, along with XBRL data - The exhibits include corporate organizational documents, various loan agreements with Farm Credit West, and certifications from the Principal Executive Officer and Principal Financial Officer[255](index=255&type=chunk)[256](index=256&type=chunk) SIGNATURES [SIGNATURES](index=58&type=section&id=SIGNATURES) This section confirms the report was duly signed by the company's CEO and CFO on September 8, 2021 - The report was signed by Harold S. Edwards (CEO) and Mark Palamountain (CFO) on **September 8, 2021**[262](index=262&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 14% increase in second quarter topline growth and a significant improvement in adjusted EBITDA, which rose to $6 million from a loss of $100,000 in the same period last year [9][10][26] - Total net revenue for the second quarter of fiscal year 2021 was $45.1 million, compared to $39.6 million in the same quarter of the previous fiscal year [18][26] - Net income applicable to common stock was $1.8 million, a turnaround from a net loss of $5 million in the same quarter of fiscal year 2020 [23][24] Business Line Data and Key Metrics Changes - Agribusiness revenue increased to $44 million from $38.4 million year-over-year, driven by higher Fresh Lemon sales of $28.7 million compared to $25.3 million [11][18][19] - Fresh Lemon average price per carton rose to $18.79 from $17.14, with utilization rates improving to 75%-80% compared to 50%-55% in the prior year [12][19] - Avocado revenue improved to $2.7 million from $2 million, while Orange revenue decreased to $1.4 million from $2.7 million due to lower volume [20][21] Market Data and Key Metrics Changes - The company is experiencing a recovery in domestic food service and export sales as dining out increases due to COVID-19 vaccine distribution [9] - The company expects to see improved year-over-year results due to increasing demand from food service and export markets [15][32] Company Strategy and Development Direction - The company is focusing on expanding its retail footprint and improving cost control measures, with expectations of positive cash flow from its real estate project, Harvest at Limoneira, starting in fiscal year 2022 [15][34] - Plans to plant an additional 250 acres of lemons in the next two years are expected to increase domestic supply significantly [33][34] Management's Comments on Operating Environment and Future Outlook - Management noted that the COVID-19 pandemic continues to impact the food service business globally, but signs of improvement are emerging [31] - The company is optimistic about maintaining fresh utilization levels and expects to navigate supply challenges effectively [46][59] - Management expressed confidence in the potential for increased cash distributions from Harvest at Limoneira and the development of a medical campus [35][36] Other Important Information - Long-term debt as of April 30, 2021, was $128.2 million, up from $122.6 million at the end of fiscal year 2020 [30] - The company received $5 million in federal tax refunds related to the CARES Act and expects additional state refunds [30] Q&A Session Summary Question: Thoughts on recent lemon price increases - Management acknowledged a $2 increase in average lemon prices per carton and highlighted improved fresh utilization as a key factor [38][39] Question: Outlook for Argentina operations - Management indicated that they are well-positioned to meet market demand despite challenges in logistics and weather [40][42] Question: Ability to handle increased food service demand - Management anticipates a supply-side challenge rather than a demand-side challenge and is focused on maintaining realistic commitments to customers [46][47] Question: Potential upside from Harvest at Limoneira - Management discussed opportunities for additional housing units and the potential for increased cash distributions from the project [50][54] Question: Fresh utilization rate expectations - Management expects to maintain fresh utilization rates in the 75%-80% range for the remainder of the year [56][59] Question: International market improvements and supply chain challenges - Management noted that export markets are gradually returning to normal, with domestic demand seeing significant increases [66][70] Question: Water rights outlook amid drought conditions - Management expressed confidence in their ability to irrigate and maintain agricultural production, while monitoring water rights closely [72][74] Question: Intentions regarding Calavo's stake in the company - Management indicated that Calavo does not currently intend to liquidate its position and sees significant upside in their ownership [78][79]