Calavo(US:CVGW)2026-01-20 16:19Financial Performance - Full Year 2025 net income from continuing operations increased by 191% to $20.0 million, with adjusted net income rising by 42% to $28.9 million[2][20] - Total net sales for Fiscal Year 2025 decreased to $648.4 million, down from $661.5 million, primarily due to a 4% decline in Fresh segment sales[8][17] - Adjusted EBITDA from continuing operations for Fiscal Year 2025 increased by 12% to $40.8 million, compared to $36.5 million in the prior year[8][20] - Gross profit for Fiscal Year 2025 was $63.7 million, representing 10% of net sales, compared to $67.8 million in the prior year[8][18] - Net sales for the three months ended October 31, 2025, were $124,681,000, a decrease of 26.6% compared to $169,959,000 for the same period in 2024[43] - Gross profit for the three months ended October 31, 2025, was $11,648,000, down 28.5% from $16,290,000 in the prior year[43] - Operating income for the twelve months ended October 31, 2025, increased to $19,611,000, compared to $16,723,000 in 2024, reflecting a 17.9% growth[43] - Net income attributable to Calavo Growers, Inc. for the three months ended October 31, 2025, was $3,817,000, compared to a loss of $139,000 in the same period last year[43] - Adjusted net income from continuing operations for the twelve months ended October 31, 2025, was $28,907,000, up from $20,360,000 in 2024, representing a 42.3% increase[47] - The net income attributable to Calavo Growers, Inc. for the twelve months ended October 31, 2025, was $19.796 million, a substantial increase from $6.796 million in 2024[49] Segment Performance - The Fresh segment experienced a 31% decrease in sales for Q4 2025, totaling $106.3 million, driven by a 19% decline in average price per carton[8][13] - The Prepared segment saw a 20% increase in sales for Q4 2025, reaching $18.4 million, attributed to an 11% increase in sales volume[8][13] Expenses and Costs - SG&A expenses for Fiscal Year 2025 decreased by 16% to $42.1 million, reflecting lower professional fees and reduced headcount-related costs[8][19] - The company incurred $1.105 million in professional fees related to Mexican tax matters for the three months ended October 31, 2025, compared to $0.233 million in 2024, reflecting a significant increase[50] - A charge of $1.801 million was recorded to resolve grower advance balances associated with a tomato program from previous fiscal years, which is not indicative of current operations[55] - Other costs outside the normal course of operations amounted to $1.008 million, primarily related to finance organization recruiting and legal settlement expenses[56] Cash Flow and Assets - Total current assets decreased to $149,426,000 as of October 31, 2025, from $158,579,000 in 2024, a decline of 5.8%[45] - Total liabilities decreased to $83,691,000 as of October 31, 2025, down from $99,343,000 in 2024, a reduction of 15.8%[45] - Cash and cash equivalents increased to $61,155,000 as of October 31, 2025, compared to $57,031,000 in 2024, an increase of 3.7%[45] Strategic Developments - The company announced a strategic combination with Mission Produce, Inc., where shareholders will receive $27.00 per share, consisting of $14.85 in cash and stock[7][9] - The merger is expected to create cost synergies of $25 million and provide shareholders with opportunities for value creation[9][10] - Calavo and Mission are seeking stockholder approvals for a proposed transaction, which may face risks including regulatory approvals and potential delays[27] - The integration of Calavo and Mission's businesses may incur higher costs and challenges than anticipated, affecting expected synergies[27] - Calavo and Mission plan to file a joint proxy statement with the SEC regarding the proposed transaction, urging investors to review the documents carefully[32] Market and Economic Conditions - The company anticipates softer first quarter results for 2026 due to continued strong avocado supply and pricing dynamics[12] - The companies are exposed to various risks such as economic conditions, client spending reductions, and changes in agricultural product prices[27] - The impact of macroeconomic trends, including increased interest rates, may affect borrowing costs and consumer behavior[29] - The companies are subject to enhanced regulatory scrutiny, which could lead to shipment delays and increased costs[29] - The companies are reliant on large customers and key personnel, which poses risks to their operational stability[28] Non-GAAP Measures - Non-GAAP measures such as adjusted EBITDA and adjusted net income are used to provide a clearer view of financial performance, excluding certain unusual items[37][38] - Adjusted EBITDA is calculated by excluding costs related to acquisitions, restructuring, and other one-time items, providing insight into ongoing operations[39] Foreign Currency Impact - The company reported a foreign currency gain of $4,291,000 for the three months ended October 31, 2025, compared to a loss of $3,041,000 in the same period last year[43] - Foreign currency remeasurement gains were $4.291 million for the three months ended October 31, 2025, compared to a loss of $3.041 million in the same period of 2024, indicating a positive shift in currency impact[52] Interest and Tariff Costs - Interest income rose to $(754) thousand for the three months ended October 31, 2025, from $(680) thousand in 2024, while interest expense decreased to $211 thousand from $274 thousand[49] - Costs related to tariffs for the three months ended October 31, 2025, were less than $0.1 million, primarily due to temporary tariffs on goods sourced from Mexico[53] - The company recorded $867 thousand in FDA regulatory hold-related charges for the three months ended October 31, 2025, reflecting unusual and non-recurring costs[54]