Calavo(CVGW) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended January 31, 2026, were $122.2 million, a decrease of 20.8% compared to $154.4 million for the same period in 2025[12] - Gross profit for the same period was $15.2 million, down from $15.7 million, reflecting a gross margin of 12.4%[12] - Operating loss for the quarter was $1.4 million, compared to an operating income of $5.0 million in the prior year[12] - Net income attributable to Calavo Growers, Inc. was $732,000, a significant decline from $4.4 million in the previous year[12] - Basic and diluted net income per share for the quarter was $0.04, down from $0.25 per share in the same quarter last year[12] - Cash used in operating activities was $8.7 million, compared to $4.4 million in the prior year, indicating increased cash outflow[14] Sales Breakdown - Fresh avocado sales accounted for 78% of total net sales in Q1 2026, generating $95.1 million, down from 80% and $123.8 million in Q1 2025[29] - Prepared products, including guacamole, saw an increase in sales to $17.5 million, representing 14% of total net sales, compared to 9% in the prior year[29] Dividends - The company declared a dividend of $0.20 per share, totaling $3.6 million, consistent with the previous year[15] - A dividend of $0.20 per share was paid on January 28, 2026, totaling $3.6 million, with another dividend declared for April 29, 2026[44] - The company declared a quarterly cash dividend of $0.20 per share to be paid on April 29, 2026, to shareholders of record on April 1, 2026[77] Mergers and Acquisitions - The company is in the process of a proposed merger with Mission Produce, which is expected to enhance market position and operational efficiencies[7] - The company entered into a merger agreement with Mission Produce on January 14, 2026, with no material changes reported since[43] Legal and Tax Matters - The company recorded approximately $0.6 million related to litigation claims for the three months ended January 31, 2026[45] - The 2013 Mexico Assessment has been adjusted to approximately 3.5 billion Mexican pesos (about $201.8 million USD) as of January 31, 2026, including interest, penalties, and inflation adjustments[48] - The company recorded a provision of $11 million for the 2013 Mexico Assessment in Q3 of fiscal year 2021, reflecting estimated fines, interest, and inflationary adjustments[56] - As of January 31, 2026, CDM's IVA receivables totaled $60.8 million (approximately 1.0 billion Mexican pesos), with historical delays in processing claims by the SAT since fiscal 2014[67] - A Federal Court in Mexico recognized CDM as a maquiladora in August 2025, which strengthens the company's position regarding the recoverability of IVA receivables[72] - The company incurred $0.2 million in professional fees related to Mexican tax matters for the three months ended January 31, 2026[57] - The SAT initiated income tax audits for fiscal years 2019 and 2020 during Q3 of fiscal 2025, focusing on CDM's classification as a maquiladora[58] - The company filed a Nullity Trial in the Federal Tax Court to recover its full refund for IVA related to the months of July, August, and September 2015[70] - The SAT refunded 36.7 million Mexican pesos (approximately $1.9 million USD) in IVA during Q2 of fiscal 2025, relating to claims for March, April, and November 2019[71] - The company is in the process of collecting IVA balances primarily through administrative processes, with potential future appeals for denied refunds[73] Operational Challenges - The company is facing challenges including supply chain disruptions and volatility in avocado prices, which may impact future performance[7] Asset Management - Long-lived assets totaled $48.5 million as of January 31, 2026, down from $49.4 million as of October 31, 2025[32] - Total inventories increased to $37.8 million as of January 31, 2026, compared to $33.6 million as of October 31, 2025[33]