Limoneira(LMNR) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Limoneira Company, including the Balance Sheets, Statements of Operations, Comprehensive (Loss) Income, Stockholders' Equity, and Cash Flows, along with detailed notes explaining the company's organization, accounting policies, asset sales, real estate development, equity investments, debt, leases, earnings per share, related-party transactions, income taxes, commitments, stock-based compensation, and segment information Consolidated Balance Sheets The consolidated balance sheets show a slight increase in total assets and liabilities from October 31, 2024, to July 31, 2025, while total stockholders' equity decreased. Key changes include a significant increase in assets held for sale and long-term debt, alongside a decrease in current liabilities and retained earnings | Metric | July 31, 2025 (in thousands) | October 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :------- | | Total assets | $299,908 | $298,815 | $1,093 | 0.37% | | Total liabilities | $108,807 | $96,314 | $12,493 | 12.97% | | Total stockholders' equity | $180,291 | $191,691 | $(11,400) | -5.95% | | Assets held for sale | $13,258 | $— | $13,258 | N/A | | Long-term debt, less current portion | $63,326 | $40,031 | $23,295 | 58.19% | | Total current liabilities | $25,794 | $34,804 | $(9,010) | -25.89% | | Retained earnings | $9,100 | $20,826 | $(11,726) | -56.31% | Consolidated Statements of Operations The company reported a net loss for both the three and nine months ended July 31, 2025, a significant decline from net income in the prior year periods. This was driven by decreased agribusiness revenues and a substantial reduction in equity in earnings of investments for the nine-month period | Metric (in thousands) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (3M) | % Change (3M) | | :-------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | Total net revenues | $47,478 | $63,305 | $(15,827) | -24.99% | | Operating (loss) income | $(630) | $8,993 | $(9,623) | -107.01% | | Net (loss) income | $(916) | $6,216 | $(7,132) | -114.73% | | Net (loss) income applicable to common stock | $(980) | $6,468 | $(7,448) | -115.16% | | Basic net (loss) income per common share | $(0.06) | $0.36 | $(0.42) | -116.67% | | Diluted net (loss) income per common share | $(0.06) | $0.35 | $(0.41) | -117.14% | | Metric (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (9M) | % Change (9M) | | :-------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | Total net revenues | $116,902 | $147,642 | $(30,740) | -20.82% | | Operating (loss) income | $(9,321) | $(3,427) | $(5,894) | -172.00% | | Net (loss) income | $(7,352) | $9,094 | $(16,446) | -180.85% | | Net (loss) income attributable to Limoneira Company | $(7,290) | $9,575 | $(16,865) | -176.14% | | Basic net (loss) income per common share | $(0.43) | $0.51 | $(0.94) | -184.31% | | Diluted net (loss) income per common share | $(0.43) | $0.51 | $(0.94) | -184.31% | Consolidated Statements of Comprehensive (Loss) Income The company reported a comprehensive loss for both the three and nine months ended July 31, 2025, primarily due to the net loss and foreign currency translation adjustments, contrasting with comprehensive income in the prior year | Metric (in thousands) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (3M) | % Change (3M) | | :-------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | Net (loss) income | $(916) | $6,216 | $(7,132) | -114.73% | | Foreign currency translation adjustments | $(414) | $(10) | $(404) | -4040.00% | | Comprehensive (loss) income | $(1,330) | $6,206 | $(7,536) | -121.43% | | Metric (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (9M) | % Change (9M) | | :-------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | Net (loss) income | $(7,352) | $9,094 | $(16,446) | -180.85% | | Foreign currency translation adjustments | $(179) | $(714) | $535 | 74.93% |\ | Comprehensive (loss) income | $(7,531) | $8,380 | $(15,911) | -189.87% | Consolidated Statements of Stockholders' Equity and Temporary Equity The consolidated statements of stockholders' equity show a decrease in total equity from October 31, 2024, to July 31, 2025, primarily driven by net losses and common stock dividends, partially offset by stock compensation | Metric (in thousands) | October 31, 2024 | July 31, 2025 | Change | | :-------------------- | :--------------- | :------------ | :----- | | Total Stockholders' Equity | $191,691 | $180,291 | $(11,400) | - Key factors affecting stockholders' equity during the nine months ended July 31, 2025, include common stock dividends of $(4,060) thousand, Series B preferred dividends of $(98) thousand, Series B-2 preferred dividends of $(279) thousand, stock compensation of $2,243 thousand, and a net loss of $(7,290) thousand[22][25] Consolidated Statements of Cash Flows For the nine months ended July 31, 2025, the company experienced a net decrease in cash, with cash used in operating and investing activities, partially offset by cash provided by financing activities. This contrasts with the prior year where operating activities provided cash | Metric (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash (used in) provided by operating activities | $(6,951) | $11,266 | $(18,217) | | Net cash used in investing activities | $(9,857) | $(6,684) | $(3,173) | | Net cash provided by (used in) financing activities | $15,891 | $(7,108) | $23,999 | | Net decrease in cash | $(885) | $(2,541) | $1,656 | | Cash at end of period | $2,111 | $1,090 | $1,021 | Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's financial reporting, including significant accounting policies, recent accounting pronouncements, asset sales, real estate development, equity investments, goodwill and intangible assets, long-term debt, leases, earnings per share calculations, related-party transactions, income taxes, commitments, stock-based compensation, segment information, and subsequent events Note 1. Organization and Basis of Presentation Limoneira Company is primarily an agribusiness company focused on growing, harvesting, packing, marketing, and selling citrus and avocados, with additional operations in residential rentals and real estate development. The unaudited interim consolidated financial statements are prepared in accordance with GAAP, reflecting all necessary adjustments, and should be read in conjunction with the annual consolidated financial statements - Limoneira Company's primary business involves growing citrus (lemons, oranges) and avocados, harvesting, packing, marketing, and selling citrus. It also has residential rental and real estate development activities[33] - The interim consolidated financial statements are unaudited and prepared in conformity with U.S. GAAP, including normal and recurring adjustments[34] Note 2. Summary of Significant Accounting Policies This note outlines the company's comprehensive (loss) income definition, details recent accounting pronouncements (ASU 2023-07, ASU 2023-09, SEC Release No. 33-11275, ASU 2024-03, ASU 2025-01), and discusses concentrations of credit risk, revenue, and vendor reliance - Comprehensive (loss) income includes all changes in net assets except stockholder transactions, with foreign currency translation adjustments being the sole component of other comprehensive income or loss[35] - The company is evaluating the impact of new ASUs on segment reporting (ASU 2023-07), income tax disclosures (ASU 2023-09), and expense disaggregation (ASU 2024-03, ASU 2025-01), and is assessing the SEC's climate-related disclosure rules (SEC Release No. 33-11275) despite the current stay and withdrawal of defense[36][37][38][40][41][42][43] - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, with provisions affecting corporate tax, including permanent extension of TCJA provisions, modifications to international tax, increased interest expense deduction, and reinstatement of 100% bonus depreciation. The Company does not anticipate a significant impact on its current effective tax rate and net deferred federal tax liabilities[44] - Concentrations of credit risk are limited due to a diverse customer base, though one customer represented 16% of revenue for the nine months ended July 31, 2025, and 17% of accounts receivable. Third-party lemons constituted 82% of domestic lemon supply for the nine months ended July 31, 2025, with two growers accounting for 57% of growers and suppliers payable[45][46] Note 3. Asset Sales and Disposals The company has classified its PDA and San Pablo orchards in Chile as assets held for sale, totaling $13.258 million, with the sale expected within one year. Additionally, it recorded a gain of $187,000 from the sale of 12 acres in Yuma, Arizona, in December 2023 - The company's 90% interest in Fruticola Pan de Azucar S. A. (PDA) and 100% interest in Agricola San Pablo, SpA (San Pablo) in Chile, including approximately 500 acres of lemons, 100 acres of oranges, and 2,900 acres of other land, are classified as assets held for sale, totaling $13,258,000 as of July 31, 2025[49] - In December 2023, the company sold 12 acres of real property in Yuma, Arizona, for $775,000, resulting in a gain on disposal of assets of $187,000[50] Note 4. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets remained relatively stable, with a slight increase from October 31, 2024, to July 31, 2025, primarily due to higher prepaid supplies and insurance and the recognition of income taxes receivable | Metric (in thousands) | July 31, 2025 | October 31, 2024 | Change | | :-------------------- | :------------ | :--------------- | :----- | | Prepaid supplies and insurance | $2,372 | $1,986 | $386 | | Sales tax receivable | $166 | $312 | $(146) | | Income taxes receivable | $224 | $— | $224 | | Lemon supplier advances | $37 | $295 | $(258) | | Other | $1,072 | $1,256 | $(184) | | Total | $3,871 | $3,849 | $22 | Note 5. Real Estate Development Real estate development assets primarily consist of land and development costs for the East Area II property, showing a slight increase. The company is involved in joint ventures (LLCB and LLCB II) for residential and commercial development, with LLCB having closed on 1,261 residential units and providing significant cash distributions to the company - Real estate development assets, primarily for the East Area II property, increased from $10,201,000 as of October 31, 2024, to $10,407,000 as of July 31, 2025[52] - The company's joint venture, Limoneira Lewis Community Builders, LLC (LLCB), has closed on lot sales representing 1,261 residential units since inception and distributed $10,004,000 in cash to the company in April 2025[60] - A $45,000,000 unsecured Line of Credit Loan Agreement for LLCB was cancelled as of May 3, 2024, with no outstanding balance. The associated $1,080,000 guarantee was removed from the company's balance sheets[57][58] Note 6. Equity in Investments Equity in investments decreased from $81.546 million to $74.325 million. The company increased its ownership in Limco Del Mar, Ltd. from 28.8% to 54.5% through a $5.6 million purchase of limited partnership units, gaining a controlling interest. Summarized financial information for LLCB is provided for the nine months ended July 31, 2024, due to significance | Investment (in thousands) | July 31, 2025 | October 31, 2024 | Change | | :------------------------ | :------------ | :--------------- | :----- | | Limoneira Lewis Community Builders, LLC | $58,758 | $67,962 | $(9,204) | | LLCB II, LLC | $11,699 | $9,566 | $2,133 | | Limco Del Mar, Ltd. | $2,553 | $2,198 | $355 | | Rosales | $811 | $1,319 | $(508) | | Romney Property Partnership | $504 | $501 | $3 | | Total | $74,325 | $81,546 | $(7,221) | - The company increased its ownership in Limco Del Mar, Ltd. from 28.8% to 54.5% by purchasing 80,608 limited partnership units for approximately $5.6 million on August 4, 2025, transitioning from significant influence to a controlling interest[66] | LLCB Financials (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | | :----------------------------- | :--------------------------- | :--------------------------- | | Revenues | $965 | $91,402 | | Net income | $1,302 | $40,880 | | Net income attributable to Limoneira Company | $831 | $19,765 | Note 7. Goodwill and Intangible Assets, Net Goodwill remained stable with a minor foreign currency adjustment. Intangible assets, net, decreased significantly due to the sale of acquired water rights and ongoing amortization. The company recorded a $1.2 million gain from water rights sales in January 2025 | Metric (in thousands) | July 31, 2025 | October 31, 2024 | Change | | :-------------------- | :------------ | :--------------- | :----- | | Goodwill Carrying Amount | $1,501 | $1,504 | $(3) | | Intangible assets, net | $2,766 | $5,221 | $(2,455) | - In January 2025, the company sold acquired water rights for $1,440,000, recording a gain of $1,200,000[70] | Estimated Future Amortization Expense (in thousands) | | :----------------------------------- | | 2025 (remaining three months) | $145 | | 2026 | $578 | | 2027 | $294 | | 2028 | $294 | | 2029 | $171 | | Thereafter | $— | | Total | $1,482 | Note 8. Other Assets Investments in mutual water companies and water rights increased, and the company recorded a $288,000 gain from the sale of water pumping rights in January 2025 - Investments in mutual water companies increased from $6,229,000 as of October 31, 2024, to $6,724,000 as of July 31, 2025[71] - In January 2025, the company sold water pumping rights in the Santa Paula Basin for $300,000, recognizing a gain of $288,000[71] Note 9. Accrued Liabilities Accrued liabilities significantly decreased from October 31, 2024, to July 31, 2025, primarily due to reductions in compensation, property taxes, and lease liabilities | Metric (in thousands) | July 31, 2025 | October 31, 2024 | Change | | :-------------------- | :------------ | :--------------- | :----- | | Compensation | $1,156 | $4,147 | $(2,991) | | Property taxes | $157 | $820 | $(663) | | Operating expenses | $3,216 | $3,020 | $196 | | Leases | $1,287 | $2,295 | $(1,008) | | Income taxes payable | $— | $456 | $(456) | | Other | $1,694 | $1,745 | $(51) | | Total | $7,510 | $12,483 | $(4,973) | Note 10. Long-Term Debt Long-term debt significantly increased, primarily due to higher borrowings under the AgWest Farm Credit revolving line of credit. The company entered into a new Master Loan Agreement (MLA) extending principal repayment to July 1, 2030, and the lender modified the debt service coverage ratio covenant, deferring measurement for fiscal year 2025 | Metric (in thousands) | July 31, 2025 | October 31, 2024 | Change | | :-------------------- | :------------ | :--------------- | :----- | | AgWest Farm Credit revolving and non-revolving lines of credit | $63,317 | $40,000 | $23,317 | | Banco de Chile term loan | $— | $433 | $(433) | | Banco de Chile COVID-19 loans | $48 | $157 | $(109) | | Total long-term debt | $63,365 | $40,590 | $22,775 | | Long-term debt, less current portion | $63,326 | $40,031 | $23,295 | - The company entered into a new Master Loan Agreement (MLA) with AgWest Farm Credit, extending the principal repayment to July 1, 2030, and providing an aggregate borrowing capacity of $115,000,000[74][75] - The lender modified the debt service coverage ratio covenant, deferring measurement as of October 31, 2025, and resuming a 1.25:1.0 ratio measured as of October 31, 2026. A new quarterly total net leverage ratio covenant will begin July 31, 2026[79] Note 11. Leases The company acts as both a lessor (primarily operating leases for residential rentals) and a lessee (operating and finance leases for agricultural land, facilities, equipment, and vehicles). Total lease revenue increased, while total lease costs also rose, with significant changes in operating and finance lease assets and liabilities | Metric (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total lease revenue | $4,526 | $4,197 | $329 | | Total lease costs | $2,272 | $1,897 | $375 | | Balance Sheet (in thousands) | July 31, 2025 | October 31, 2024 | Change | | :--------------------------- | :------------ | :--------------- | :----- | | Operating lease ROU assets | $1,141 | $2,416 | $(1,275) | | Finance lease assets | $1,760 | $772 | $988 | | Current operating lease liabilities | $849 | $2,075 | $(1,226) | | Current finance lease liabilities | $438 | $220 | $218 | | Non-current operating lease liabilities | $305 | $400 | $(95) | | Non-current finance lease liabilities | $1,039 | $418 | $621 | Note 12. Earnings Per Share Basic and diluted net loss per common share were $(0.06) for the three months and $(0.43) for the nine months ended July 31, 2025, reflecting a significant decline from positive EPS in the prior year periods. The calculations were performed using the two-class method | Metric | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Basic net (loss) income per common share | $(0.06) | $0.36 | $(0.42) | | Diluted net (loss) income per common share | $(0.06) | $0.35 | $(0.41) | | Metric | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Basic net (loss) income per common share | $(0.43) | $0.51 | $(0.94) | | Diluted net (loss) income per common share | $(0.43) | $0.51 | $(0.94) | Note 13. Related-Party Transactions The company engages in various related-party transactions, including with mutual water companies, YMIDD, FGF Trapani, LLCB, Rosales, Del Mar, and a principal owner. These transactions involve receivables, payables, and revenues/expenses related to water, farming services, fruit sales, and real estate development - The company has significant related-party transactions, including receivables from FGF Trapani ($3,858k) and YMIDD ($306k), and payables to LLCB ($3,444k) and FGF Trapani ($757k) as of July 31, 2025[91] - For the nine months ended July 31, 2025, key related-party revenues include $3,320k from Rosales (Agribusiness) and $987k from YMIDD (Agribusiness). Key expenses include $1,908k to Rosales (Agribusiness Expense) and $1,088k to mutual water companies (Agribusiness Expense)[93] - The company provides residential housing to employees, has representation on boards of mutual water companies and YMIDD, is a partner in Trapani Fresh, and has joint ventures with Lewis for real estate development (LLCB)[93][94][95] Note 14. Income Taxes The effective tax rate for the nine months ended July 31, 2025, was lower than the federal statutory rate due to foreign tax rates, state taxes, stock-based compensation, executive compensation, nondeductible items, and valuation allowances. The company has no material uncertain tax positions - The effective tax rate for the nine months ended July 31, 2025, was lower than the 21% federal statutory rate due to foreign jurisdictions, state taxes, stock-based compensation, executive compensation, nondeductible items, and valuation allowances on foreign deferred tax assets[96] - The company has no material uncertain tax positions and no accrued interest or penalties associated with uncertain tax positions as of July 31, 2025[96] Note 15. Commitments and Contingencies The company is involved in various lawsuits and legal proceedings in the ordinary course of business but does not expect any current pending or threatened litigation to have a material adverse effect on its business, financial condition, liquidity, or operating results - The company is involved in various lawsuits and legal proceedings that arise in the ordinary course of business[97] - Management does not expect any pending or threatened litigation to have a material adverse effect on its business, financial condition, liquidity, or operating results[97] Note 16. Stock-based Compensation The company grants restricted common stock to management, key executives, and non-employee directors under its Stock Plan, with vesting periods typically over one to three years. New grants were made in November and December 2024, and April 2025, with associated compensation expenses recognized over the vesting periods. Employees also exchanged common stock to cover payroll taxes on vested restricted stock - In November and December 2024, the company granted 20,555 shares ($525,000 expense) and 6,194 shares ($163,000 expense) of restricted stock to management, vesting over three years[99][100] - Key executives received 29,366 shares ($750,000 expense) in November 2024 and 2,972 shares ($78,000 expense) in December 2024, also vesting over three years or one year, respectively[102][104] - Non-employee directors received 30,540 shares in April 2025, vesting after one year[106] - During the nine months ended July 31, 2025, management exchanged 74,504 shares of common stock, valued at $1,639,000, to pay payroll taxes related to restricted stock vesting[107] Note 17. Segment Information The company operates in four reportable segments: fresh lemons, lemon packing, avocados, and other agribusiness. Segment performance is evaluated based on revenues and operating income, with corporate and other operations including unallocated expenses. Agribusiness revenues decreased for both the three and nine months ended July 31, 2025, compared to 2024 - The company's four reportable operating segments are fresh lemons, lemon packing, avocados, and other agribusiness (including oranges, specialty citrus, wine grapes, and farm management)[108] | Agribusiness Revenues (in thousands) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (3M) | % Change (3M) | | :----------------------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | Fresh Lemons | $28,123 | $36,746 | $(8,623) | -23.47% | | Lemon Packing | $14,556 | $15,699 | $(1,143) | -7.28% | | Avocados | $8,488 | $13,897 | $(5,409) | -38.92% | | Other Agribusiness | $3,268 | $6,006 | $(2,738) | -45.59% | | Total Agribusiness | $45,942 | $61,849 | $(15,907) | -25.72% | | Agribusiness Revenues (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (9M) | % Change (9M) | | :----------------------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | Fresh Lemons | $74,491 | $94,971 | $(20,480) | -21.56% | | Lemon Packing | $40,219 | $43,885 | $(3,666) | -8.35% | | Avocados | $11,430 | $16,245 | $(4,815) | -29.64% | | Other Agribusiness | $11,195 | $16,473 | $(5,278) | -32.04% | | Total Agribusiness | $112,376 | $143,445 | $(31,069) | -21.66% | Note 18. Series B-2 Convertible Preferred Stock and Treasury Stock The company issued 9,300 shares of Series B-2 Preferred Stock for $9.3 million in 2014. An option agreement related to farmland and water rights in Yuma, Arizona, was extended to January 1, 2027. The Board approved a $30 million share repurchase program in March 2025, but no shares were repurchased under this program as of July 31, 2025 - In March and April 2014, the company issued 9,300 shares of Series B-2, 4.0% voting preferred stock for $9,300,000[114] - An option agreement with WPI-ACP to purchase an undivided interest in real estate and water rights in Yuma County, Arizona, was extended to January 1, 2027[115] - The Board of Directors approved a $30,000,000 share repurchase program in March 2025, but no shares were repurchased under this program as of July 31, 2025[116] Note 19. Subsequent Events The company evaluated events subsequent to July 31, 2025, and determined that no other subsequent events require recognition or disclosure in the unaudited consolidated financial statements, beyond those already described in the notes - No additional subsequent events requiring recognition or disclosure were identified after July 31, 2025, through the filing date[117] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Limoneira Company's business, including its agribusiness, rental operations, and real estate development divisions. It details recent developments, analyzes consolidated and segment-specific financial results for the three and nine months ended July 31, 2025, compared to 2024, and discusses liquidity, capital resources, and critical accounting estimates Overview of Business and Operations Limoneira Company is an agribusiness focused on citrus and avocados, with significant land and water resources, complemented by rental operations and real estate development. The agribusiness division is seasonal, with cultural costs higher in Q1/Q2 and harvest costs peaking in Q3. The company is expanding avocado production and strategically manages its water resources, which are currently impacted by drought conditions in Southern California and water shortages in Arizona - Limoneira Company is primarily an agribusiness, one of California's oldest citrus growers and a large avocado grower in the U.S., with approximately 10,500 acres of land and water resources[119][120] - The company's business divisions include agribusiness (fresh lemons, lemon packing, avocados, other agribusiness), rental operations, and real estate development[123] - Agribusiness operations are seasonal, with cultural costs higher in Q1/Q2 and harvest costs peaking in Q3. The company plans to expand avocado production by an additional 500 acres through fiscal year 2027[125][127] - Water resources include rights in Santa Paula, Fillmore, and Paso Robles Basins in California, and Colorado River water rights in Arizona. Southern California is experiencing severe drought, and Arizona faces Tier 1 shortage in 2026, leading to fallowing agreements[131][132][133] Recent Developments Recent developments include the sale of water pumping rights for $1.7 million, termination of a farm management agreement, approval of a $30 million share repurchase program (no repurchases yet), conclusion of a strategic alternatives exploration, plans for an organic waste recycling joint venture, a $10 million cash distribution from a real estate joint venture, a new commercial packinghouse license agreement with Sunkist Growers, a cash dividend declaration, a new Master Loan Agreement with AgWest Farm Credit, and an increase in ownership of Limco Del Mar, Ltd. to 54.5% - In January 2025, the company sold Santa Paula Basin water pumping rights for $1.7 million, recording a $1.5 million gain[134] - The Farm Management Agreement (FMA) with PGIM Real Estate Finance, LLC was terminated effective March 31, 2025[135] - The Board of Directors approved a $30.0 million share repurchase program in March 2025, though no shares have been repurchased under this program as of July 31, 2025[136] - The company concluded its formal exploration of strategic alternatives but remains committed to its strategic roadmap and opportunistic evaluation of M&A and non-core asset monetization[137] - A letter of intent was signed to form a 50%/50% joint venture with Agromin Corporation to expand organic waste recycling, with construction expected to begin in fiscal year 2026[138] - Received a $10.0 million cash distribution from the Harvest at Limoneira real estate joint venture in April 2025[139] - Entered into a Commercial Packinghouse License Agreement with Sunkist Growers, Inc., effective November 1, 2025, for a three-year initial term[140] - Declared a cash dividend of $0.075 per common share, paid on July 18, 2025, totaling $1.4 million[141] - Entered into a new Master Loan Agreement with AgWest Farm Credit on June 26, 2025, extending principal repayment to July 1, 2030[142] - Increased ownership in Limco Del Mar, Ltd. from 28.8% to 54.5% by purchasing 80,608 limited partnership units for $5.6 million on August 4, 2025[143] Results of Operations - Consolidated Consolidated results show a significant decline in net revenues and a shift from income to loss for both the three and nine months ended July 31, 2025, compared to the prior year. This was primarily driven by decreased agribusiness revenues (lemons, avocados, farm management) and a substantial reduction in equity in earnings of investments Three Months Ended July 31, 2025 Compared to the Three Months Ended July 31, 2024 Total net revenues decreased by 25% to $47.5 million, primarily due to lower lemon and avocado sales and reduced farm management revenue. Total costs and expenses decreased by 11% to $48.1 million, mainly from lower agribusiness costs and SG&A. Operating income shifted to a loss, and net income turned into a net loss | Metric (in thousands) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Total net revenues | $47,478 | $63,305 | $(15,827) | -24.99% | | Agribusiness revenues | $45,942 | $61,849 | $(15,907) | -25.72% | | Other operations revenue | $1,536 | $1,456 | $80 | 5.49% | | Total costs and expenses | $48,108 | $54,312 | $(6,204) | -11.42% | | Operating (loss) income | $(630) | $8,993 | $(9,623) | -107.01% | | Net (loss) income attributable to Limoneira Company | $(855) | $6,593 | $(7,448) | -112.97% | - Lemon revenues decreased by 18% due to lower prices of fresh and brokered lemons. Avocado revenues decreased by 39% due to lower volume and prices. Farm management revenue decreased by 97% due to FMA termination[147][149] - Agribusiness costs decreased by 7%, driven by lower growing costs (47% decrease) and third-party grower/supplier costs (6% decrease), partially offset by increased packing costs (14% increase)[148][150][155] - Selling, general and administrative expenses decreased by 29% ($2.0 million), primarily due to a $2.2 million net decrease in salaries, benefits, and incentive compensation[152][156] Nine Months Ended July 31, 2025 Compared to the Nine Months Ended July 31, 2024 Total net revenues decreased by 21% to $116.9 million, mainly due to lower lemon, avocado, and farm management revenues. Total costs and expenses decreased by 16% to $126.2 million, driven by lower agribusiness costs and SG&A, and a gain on water rights sales. Operating income shifted to a larger loss, and net income turned into a significant net loss | Metric (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Total net revenues | $116,902 | $147,642 | $(30,740) | -20.82% | | Agribusiness revenues | $112,376 | $143,445 | $(31,069) | -21.66% | | Other operations revenue | $4,526 | $4,197 | $329 | 7.84% | | Total costs and expenses | $126,223 | $151,069 | $(24,846) | -16.45% | | Operating (loss) income | $(9,321) | $(3,427) | $(5,894) | -172.00% | | Net (loss) income attributable to Limoneira Company | $(7,290) | $9,575 | $(16,865) | -176.14% | - Lemon revenues decreased by 19% due to lower prices and volume. Avocado revenues decreased by 30% due to lower volume. Farm management revenue decreased by 78% due to FMA termination[157][159] - Agribusiness costs decreased by 14%, primarily due to lower growing costs (39% decrease) and third-party grower/supplier costs (15% decrease)[160][163] - Selling, general and administrative expenses decreased by 21% ($4.5 million), mainly due to a $4.9 million net decrease in salaries, benefits, and incentive compensation[164][167] - Total other income decreased by $16.6 million, primarily due to a $16.3 million decrease in equity in earnings of investments, net, related to LLCB's residential homesite closings in the prior year[164][167] Trailing Twelve Months Ended July 31, 2025 and 2024 For the trailing twelve months, total net revenues decreased by $28.3 million, primarily due to lower lemon, specialty citrus, wine grapes, and farm management revenue. Total costs and expenses decreased by $29.4 million, mainly from agribusiness costs and SG&A. Operating loss remained significant, and total other income decreased substantially due to lower equity in earnings from investments | Metric (in thousands) | Trailing 12 Months Ended July 31, 2025 | Trailing 12 Months Ended July 31, 2024 | Change | | :-------------------- | :------------------------------------- | :------------------------------------- | :----- | | Total net revenues | $160,763 | $189,074 | $(28,311) | | Total costs and expenses | $172,835 | $202,192 | $(29,357) | | Operating loss | $(12,072) | $(13,118) | $1,046 | | Total other income | $1,198 | $21,435 | $(20,237) | | Net (loss) income attributable to Limoneira Company | $(9,149) | $6,119 | $(15,268) | - Total revenues decreased by $28.3 million, primarily due to decreased lemon, specialty citrus and wine grapes, and farm management revenue, partially offset by increased avocado revenue[195] - Total other income decreased by $20.2 million, primarily due to a decrease in equity in earnings of investments, net, related to LLCB[195] Non-GAAP Financial Measures The company uses EBITDA and adjusted EBITDA (excluding stock-based compensation, impairment, asset disposal, and severance) as non-GAAP measures to evaluate operational results, providing a more comparable basis between periods. Both EBITDA and adjusted EBITDA decreased significantly for the three and nine months ended July 31, 2025, compared to the prior year - EBITDA and adjusted EBITDA are non-GAAP measures used to evaluate results of operations, excluding significant depreciable assets, interest costs, stock-based compensation, impairment, asset disposal, and severance benefits[145] | Metric (in thousands) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change (3M) | % Change (3M) | | :-------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | EBITDA | $2,197 | $11,973 | $(9,776) | -81.65% | | Adjusted EBITDA | $2,974 | $13,791 | $(10,817) | -78.43% | | Metric (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change (9M) | % Change (9M) | | :-------------------- | :--------------------------- | :--------------------------- | :---------- | :------------ | | EBITDA | $(1,759) | $20,667 | $(22,426) | -108.51% | | Adjusted EBITDA | $513 | $25,518 | $(25,005) | -98.00% | Segment Results of Operations The company's four reportable segments (fresh lemons, lemon packing, avocados, and other agribusiness) showed varied performance. Fresh lemons and avocados experienced revenue declines, while lemon packing saw increased costs per carton. Other agribusiness revenues decreased significantly due to reduced farm management services Three Months Ended July 31, 2025 Compared to the Three Months Ended July 31, 2024 - Segment Analysis For the three months ended July 31, 2025, Fresh Lemons net revenues decreased by 23% due to lower sales. Lemon Packing net revenues decreased by 7%, with a 14% increase in costs due to higher labor. Avocado revenues decreased by 39% due to lower volume and prices. Other Agribusiness revenues decreased by 46%, primarily from reduced farm management services | Segment (in thousands) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | Change | % Change | | :--------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Fresh Lemons Total net revenues | $28,123 | $36,746 | $(8,623) | -23.47% | | Lemon Packing Total net revenues | $14,556 | $15,699 | $(1,143) | -7.28% | | Avocados Revenues | $8,488 | $13,897 | $(5,409) | -38.92% | | Other Agribusiness Total net revenues | $3,268 | $6,006 | $(2,738) | -45.59% | - Fresh lemons segment revenue decreased by $8.6 million, primarily due to decreases in brokered lemons and other lemon sales ($5.9 million), fresh packed lemon sales ($2.0 million), and lemon by-products sales ($0.7 million)[169] - Lemon packing costs increased by $1.6 million (14%) primarily due to higher labor costs, leading to a decrease in operating income per carton sold from $3.25 to $1.31[171][172] - Other agribusiness revenues decreased by $2.7 million, mainly due to a $3.1 million decrease in farm management revenues[176][179] Nine Months Ended July 31, 2025 Compared to the Nine Months Ended July 31, 2024 - Segment Analysis For the nine months ended July 31, 2025, Fresh Lemons net revenues decreased by 22% due to lower sales. Lemon Packing net revenues decreased by 8%, with stable costs but lower operating income per carton. Avocado revenues decreased by 30% due to lower volume. Other Agribusiness revenues decreased by 32%, primarily from reduced farm management and wine grape revenues | Segment (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change | % Change | | :--------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Fresh Lemons Total net revenues | $74,491 | $94,971 | $(20,480) | -21.56% | | Lemon Packing Total net revenues | $40,219 | $43,885 | $(3,666) | -8.35% | | Avocados Revenues | $11,430 | $16,245 | $(4,815) | -29.64% | | Other Agribusiness Total net revenues | $11,195 | $16,473 | $(5,278) | -32.04% | - Fresh lemons segment revenue decreased by $20.5 million, primarily due to decreases in fresh packed lemon sales ($11.0 million), brokered lemons and other lemon sales ($8.1 million), and lemon by-products sales ($1.4 million)[183] - Lemon packing operating income per carton sold decreased from $2.12 to $1.23, despite stable total costs and expenses[185][186] - Other agribusiness revenues decreased by $5.3 million, mainly due to a $5.7 million decrease in farm management revenues and a $0.7 million decrease in specialty citrus and wine grape revenues[190][194] Liquidity and Capital Resources The company's liquidity is primarily from operations, a revolving credit facility, asset sales, and equity investment distributions. Cash flows from operating activities shifted from providing $11.3 million in 2024 to using $7.0 million in 2025. Investing activities used more cash, while financing activities provided $15.9 million in 2025, a significant change from using $7.1 million in 2024, driven by net long-term debt borrowings. The company believes current liquidity sources are sufficient for the next 12 months and beyond - Primary liquidity sources are cash and cash flows from operations, revolving credit facility, asset sales, and distributions from equity investments[196] | Cash Flow Activity (in thousands) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash (used in) provided by operating activities | $(6,951) | $11,266 | $(18,217) | | Net cash used in investing activities | $(9,857) | $(6,684) | $(3,173) | | Net cash provided by (used in) financing activities | $15,891 | $(7,108) | $23,999 | - The company has an aggregate borrowing capacity of $115.0 million under its credit facilities, with $50.7 million available as of July 31, 2025[203] - Financing activities for the nine months ended July 31, 2025, were primarily driven by net borrowings of long-term debt of $22.8 million, partially offset by common and preferred dividends of $4.4 million[208] - The company received a $10.0 million cash distribution from its Harvest at Limoneira real estate joint venture in April 2025[206] Critical Accounting Estimates and Recent Accounting Pronouncements The company's critical accounting policies and estimates have not materially changed since the October 31, 2024, Annual Report on Form 10-K. Information on recent accounting pronouncements is detailed in Note 2 to the consolidated financial statements - Critical accounting policies and estimates have not changed materially since the filing of the Annual Report on Form 10-K for the fiscal year ended October 31, 2024[209] - Information concerning recent accounting pronouncements is provided in Note 2 of the consolidated financial statements[210] Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes in the disclosures regarding quantitative and qualitative market risk from the company's Annual Report on Form 10-K for the fiscal year ended October 31, 2024 - No material changes in quantitative and qualitative disclosures about market risk since the Annual Report on Form 10-K for the fiscal year ended October 31, 2024[211] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of July 31, 2025. There have been no significant changes in internal control over financial reporting during the quarter, though the company acknowledges inherent limitations in all control systems - Disclosure controls and procedures were evaluated and deemed effective as of July 31, 2025, by management, including the CEO and CFO[212] - No significant changes in internal control over financial reporting occurred during the quarter ended July 31, 2025[213] - The company acknowledges that control systems provide reasonable, but not absolute, assurance and have inherent limitations due to resource constraints and cost-effectiveness[214] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various lawsuits and legal proceedings in the ordinary course of business, as detailed in Note 15 to the Consolidated Financial Statements, and does not expect any material adverse effects - The company is a party to various lawsuits, arbitrations, or mediations that arise in the ordinary course of business[215] - The disclosure regarding legal proceedings is incorporated by reference from Note 15 - Commitments and Contingencies[215] Item 1A. Risk Factors No material changes to risk factors were reported since the October 31, 2024, Annual Report on Form 10-K, except for an updated discussion on restrictive covenants in debt instruments. These covenants limit financial and operating flexibility, and non-compliance could lead to default and acceleration of debt - No material changes to risk factors, except for an updated discussion on restrictive covenants in debt instruments[216] - Restrictive covenants in debt instruments limit the company's ability to incur additional debt, make investments/acquisitions, create liens, engage in affiliate transactions, merge, or sell assets[217][219] - Failure to comply with financial covenants (debt service coverage ratio, total net leverage ratio) could result in an event of default, acceleration of indebtedness, and potential action against collateral[217][218] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the third quarter of fiscal year 2025, the company purchased 20,735 shares of common stock from employees at a weighted average price of $15.08 per share. These shares were acquired as a result of share withholdings to pay income tax related to the vesting of restricted stock awards. No shares were repurchased under the $30.0 million share repurchase program approved in March 2025 | Period | Total Number of Shares Purchased | Weighted Average Price Paid per Share | | :------------------------- | :----------------------------- | :---------------------------------- | | May 1, 2025 - May 31, 2025 | — | $— | | June 1, 2025 - June 30, 2025 | 20,735 | $15.08 | | July 1, 2025 - July 31, 2025 | — | $— | | Total | 20,735 | | - Shares were acquired from employees to pay income tax related to the vesting and distribution of restricted stock awards[220] - No shares were repurchased under the $30.0 million share repurchase program approved in March 2025 as of July 31, 2025[220] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities[221] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[222] Item 5. Other Information The company reported no other information for this period - None[222] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certificates of designation for preferred stock, descriptions of securities, and key agreements such as the Packinghouse License Agreement with Sunkist Growers and the Master Loan Agreement with AgWest Farm Credit. It also includes certifications from executive officers - Exhibits include Restated Certificate of Incorporation, Certificates of Amendment, Amended and Restated Bylaws, Certificates of Designation for various preferred stocks, Description of Securities, Packinghouse License Agreement with Sunkist Growers, and Master Loan Agreement with AgWest Farm Credit[223] - Certifications from the Principal Executive Officer and Principal Financial Officer are included pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), and 18 U.S.C. Section 1350[224] SIGNATURES SIGNATURES The Quarterly Report on Form 10-Q was duly signed on September 9, 2025, by Harold S. Edwards, Director, President and Chief Executive Officer, and Mark Palamountain, Executive Vice President, Chief Financial Officer and Treasurer, on behalf of Limoneira Company - The report was signed by Harold S. Edwards, Director, President and Chief Executive Officer, and Mark Palamountain, Executive Vice President, Chief Financial Officer and Treasurer, on September 9, 2025[226]