Limoneira(US:LMNR)2025-06-09 20:04PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Limoneira Company for the quarterly period ended April 30, 2025, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows Consolidated Balance Sheets As of April 30, 2025, total assets slightly decreased to $296.6 million, while total liabilities increased to $103.2 million, primarily due to a rise in long-term debt Consolidated Balance Sheet Highlights (in thousands) | Account | April 30, 2025 | October 31, 2024 | | :--- | :--- | :--- | | Total Assets | $296,627 | $298,815 | | Total Current Assets | $29,834 | $25,846 | | Equity in investments | $74,073 | $81,546 | | Total Liabilities | $103,166 | $96,314 | | Long-term debt, less current portion | $54,929 | $40,031 | | Total Stockholders' Equity | $182,651 | $191,691 | Consolidated Statements of Operations For the three months ended April 30, 2025, the company reported a net loss of $3.4 million, a significant decline from the prior year's net income, mainly due to decreased equity earnings from investments Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Net Revenues | $35,119 | $44,606 | $69,424 | $84,337 | | Operating Loss | $(3,345) | $(4,675) | $(8,691) | $(12,420) | | Equity in earnings of investments, net | $491 | $16,592 | $593 | $16,633 | | Net (Loss) Income | $(3,365) | $6,555 | $(6,436) | $2,878 | | Diluted Net (Loss) Income per Share | $(0.20) | $0.35 | $(0.38) | $0.15 | Consolidated Statements of Cash Flows For the six months ended April 30, 2025, net cash used in operating activities improved to $4.0 million, while investing activities used $6.5 million, and financing activities provided $9.6 million Cash Flow Summary for Six Months Ended April 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,984) | $(13,295) | | Net cash used in investing activities | $(6,506) | $(2,920) | | Net cash provided by financing activities | $9,554 | $14,016 | | Net decrease in cash | $(913) | $(2,229) | Notes to Consolidated Financial Statements The notes detail accounting policies, business segments, asset sales, real estate projects, debt, and subsequent events, including a $1.5 million gain from water rights sales and a new packinghouse agreement - The company's business primarily involves growing, harvesting, packing, and selling citrus (mainly lemons) and avocados, alongside rental operations and real estate development29 - In January 2025, the company sold water rights in two transactions for a total of $1.74 million, recording a gain of $1.5 million6162124 - The real estate joint venture, LLCB, closed on lot sales for 1,261 residential units since inception and made a cash distribution of $10.0 million to the company in April 202553 - As of April 30, 2025, the company had $55.0 million in total long-term debt, primarily with AgWest Farm Credit, with an available borrowing capacity of $60.1 million6566192 Segment Operating Income (Loss) for Six Months Ended April 30, 2025 (in thousands) | Segment | Total Net Revenues | Operating (Loss) Income | | :--- | :--- | :--- | | Fresh Lemons | $46,368 | $(340) | | Lemon Packing | $9,197 | $2,946 | | Avocados | $2,942 | $1,282 | | Other Agribusiness | $7,927 | $983 | | Total Agribusiness | $66,434 | $1,231 | - Subsequent to the quarter end, on June 6, 2025, the company entered into a three-year Commercial Packinghouse License Agreement with Sunkist Growers, Inc., effective November 1, 2025105 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for Q2 and H1 fiscal 2025, attributing revenue and net income declines to lower lemon sales and reduced equity earnings from the LLCB real estate venture, while noting sufficient liquidity Overview Limoneira is an agribusiness company engaged in fruit production, sales, rental operations, and real estate development, managing approximately 10,500 acres of land and water resources across multiple regions - The company operates three business divisions: agribusiness, rental operations, and real estate development113 - Agricultural plantings include approximately 3,100 acres of lemons, 1,400 acres of avocados, 100 acres of oranges, and 400 acres of wine grapes across California, Arizona, Chile, and Argentina110 - The company is expanding avocado production by 1,000 acres through fiscal year 2027 to capitalize on strong consumer demand117 Recent Developments In early 2025, Limoneira sold water rights, announced a $30.0 million share repurchase program, concluded strategic alternative exploration, received a real estate JV distribution, and formed a new organic waste recycling JV - Announced a $30.0 million share repurchase program in March 2025126 - Concluded its process of exploring strategic alternatives, but will continue to evaluate M&A opportunities and monetize non-core assets127 - Received a $10.0 million cash distribution from the Harvest at Limoneira real estate joint venture in April 2025130 - Announced a letter of intent to form a 50/50 joint venture with Agromin Corporation to expand organic waste recycling operations129 Results of Operations For Q2 2025, total net revenues fell 21% to $35.1 million, and for H1 2025, they fell 18% to $69.4 million, primarily due to lower lemon sales volume and pricing, resulting in a net loss and negative Adjusted EBITDA Q2 Revenue by Product (in thousands) | Product | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Lemons | $27,304 | $35,805 | $(8,501) | (24)% | | Avocados | $2,780 | $2,348 | $432 | 18% | | Oranges | $1,574 | $1,160 | $414 | 36% | | Farm management | $339 | $2,046 | $(1,707) | (83)% | H1 Revenue by Product (in thousands) | Product | H1 2025 | H1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Lemons | $55,565 | $68,781 | $(13,216) | (19)% | | Avocados | $2,942 | $2,348 | $594 | 25% | | Oranges | $3,142 | $2,301 | $841 | 37% | | Farm management | $1,520 | $4,094 | $(2,574) | (63)% | Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income attributable to Limoneira | $(3,361) | $6,567 | $(6,435) | $2,982 | | EBITDA | $(736) | $14,226 | $(3,956) | $8,694 | | Adjusted EBITDA | $(167) | $16,560 | $(2,461) | $11,727 | - The decrease in Q2 2025 other income was primarily due to a $16.1 million decrease in equity in earnings from investments, mainly from the LLCB joint venture which had significant home closings in the prior year period144 Segment Results of Operations In Q2 2025, Fresh Lemons revenue fell 26% due to lower sales, Lemon Packing revenue decreased 13%, Avocados revenue increased due to higher prices, and Other Agribusiness revenue dropped 31% from a terminated farm management agreement - Fresh Lemons Q2 revenue decreased by $8.1 million (26%) due to a $6.1 million drop in fresh packed lemon sales and a $1.4 million decrease in brokered lemon sales158161 - Lemon Packing Q2 operating income per carton fell to $1.27 from $1.58 in the prior year162 - Avocados segment Q2 revenue increased to $2.8 million from $2.3 million, driven by higher prices per pound ($2.26 vs $1.47), despite lower volume134164 - Other Agribusiness Q2 revenue decreased by $1.6 million (31%), primarily due to a $1.7 million decline in farm management revenues following the termination of the FMA165 Liquidity and Capital Resources The company's liquidity sources include cash from operations, its revolving credit facility, asset sales, and equity investment distributions, with management confident in sufficient liquidity for the next 12 months - Primary liquidity sources are cash from operations, the revolving credit facility, asset sales, and distributions from equity investments185 - As of April 30, 2025, the company had $54.9 million in outstanding borrowings under its AgWest Farm Credit Facility and $60.1 million of availability192 - The company received a $10.0 million cash distribution from its Harvest at Limoneira real estate joint venture in April 2025195 - Management believes cash flows from operations and available borrowing capacity will be sufficient to satisfy capital expenditures, debt service, and working capital needs for the next 12 months187 Quantitative and Qualitative Disclosures about Market Risk There have been no material changes in the company's market risk disclosures since its Annual Report on Form 10-K for the fiscal year ended October 31, 2024 - No material changes in market risk disclosures were reported for the period200 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of April 30, 2025, with no significant changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of April 30, 2025201 - There were no significant changes in internal control over financial reporting during the quarter202 PART II. OTHER INFORMATION Legal Proceedings The company is party to various legal proceedings arising in the ordinary course of business but does not expect any to have a material adverse effect on its financial condition or operating results - The company is not aware of any pending or threatened litigation that it expects will have a material adverse effect on its business87205 Risk Factors There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the fiscal year ended October 31, 2024 - No material changes in risk factors were reported for the period206 Unregistered Sales of Equity Securities and Use of Proceeds In March 2025, the Board approved a $30.0 million share repurchase program, though no shares were repurchased under it as of April 30, 2025; 6,680 shares were acquired from employees for tax obligations - In March 2025, the company's Board of Directors approved a share repurchase program for up to $30.0 million of its common stock207 - No shares were repurchased under the new program as of April 30, 2025207 - 6,680 shares were acquired from employees at an average price of $15.03 per share to satisfy tax withholdings on vested restricted stock207 Other Information There is no other information to report for this item - None209 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906212 - The financial statements and notes are formatted in Inline XBRL212