Limoneira(LMNR) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) 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 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 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) 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 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 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 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 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][31][32] 2. Summary of Significant Accounting Policies 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][40] - 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][42] 3. Concentrations and Geographic Information 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] - Two individual customers represented 17% and 13% of revenues, respectively, for the nine months ended July 31, 2021[45] - Total sales in Argentina by Trapani Fresh decreased significantly from $12.105 million in the nine months ended July 31, 2020, to $3.265 million in the same period of 2021, following an agreement to sell and license certain assets to FGF[47] 4. Prepaid Expenses and Other Current Assets This table provides a breakdown of prepaid expenses and other current assets Prepaid Expenses and Other Current Assets Details | Item | July 31, 2021 ($ 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 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] - The company expects to sell its Sevilla property for $2.7 million in calendar year 2021, with an immaterial gain expected upon closing[59] 6. Equity in Investments This table presents the company's equity method investments and their financial contributions Equity in Investments Summary | Investment | July 31, 2021 ($ 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 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 $186,000 during the nine months ended July 31, 2021[66] 8. Other Assets This table provides a breakdown of other non-current assets Other Assets Details | Item | July 31, 2021 ($ thousands) | October 31, 2020 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------------- | :----------------------------- | :------------------- | :--------- | | Investments in Mutual Water Companies | 5,990 | 5,563 | 427 | 7.68% | 9. Accrued Liabilities 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 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][207] - 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][214] 11. Leases 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 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) | $0.60 | 111.11% | 13. Related-Party Transactions This note describes the company's ongoing transactions with related parties - The company has ongoing related-party transactions with entities such as mutual water companies, Calavo, and FGF, involving various operational and financial exchanges[96][99][102] 14. Income Taxes This note explains the company's effective tax rate and its components - The effective tax rate for the nine months ended July 31, 2021, exceeded the 21% federal statutory rate due to foreign taxes, state taxes, and nondeductible items[103] 15. Retirement Plans This note details the company's defined benefit pension plan and related costs Net Periodic Benefit Cost | Metric | 9 Months Ended July 31, 2021 ($ 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] 16. Commitments and Contingencies 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] 17. Stock-based Compensation and Treasury Stock 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] - 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 $3.493 million[117] 18. Segment Information This table provides financial information broken down by the company's operating segments Agribusiness Segment Revenues and Operating Income | Segment | 9 Months Ended July 31, 2021 ($ 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 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, liquidity, capital resources, and critical accounting policies 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] - The company is one of the largest growers of lemons and avocados in the United States[128][132] - 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] - 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] - 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] COVID-19 Pandemic 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] - 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] - 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][155] Results of Operations 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 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 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 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 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 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][206] - 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] - 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] 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] Cash Flows from Operating Activities 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][206] Cash Flows from Investing Activities 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][206] Cash Flows from Financing Activities 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][206] Transactions Af ecting Liquidity and Capital Resources 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][210] - 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] - 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] Contractual Obligations 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] Fixed Rate and Variable Rate Debt 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] Of -Balance Sheet Arrangements 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] 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] Critical Accounting Policies and Estimates 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][223][225][226][228][229][232][233][235][236][237] Recent Accounting Pronouncements 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] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] Item 4. Controls and Procedures 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] - 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][243] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities This section reports no defaults upon senior securities for the period - No defaults upon senior securities were reported[251] Item 4. Mine Safety Disclosures 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] Item 5. Other Information This section reports no other information for the period - No other information was reported under this item[253] Item 6. Exhibits 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][256] SIGNATURES 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]