Calavo(US:CVGW)2021-12-21 01:38Financial Data and Key Metrics Changes - In Q4 2021, consolidated revenue increased by 17% year-over-year, primarily driven by a 26% increase in the Fresh segment, which saw a 37% rise in average selling price for avocados, despite a 7% decline in volume [23][24] - Gross profit margins declined year-over-year due to lower volume and higher costs, with RFG gross profit down nearly $8 million due to market-wide pressures [27][28] - The company ended the quarter with $141 million in cash and liquid investments, maintaining a strong financial position and low leverage [32] Business Segment Data and Key Metrics Changes - Fresh segment revenue increased by 26%, driven by higher average selling prices, while RFG revenue rose by 7% due to a favorable product mix and price increases [23][24] - The Food segment experienced a 6% increase in sales, mainly from higher volume from foodservice customers and price increases [24] - Project Uno is expected to yield an annualized EBITDA increase of $70 million, with a total one-time cost of approximately $30 million [15][30] Market Data and Key Metrics Changes - U.S. avocado demand continues to grow, with per capita consumption exceeding 9 pounds, double the rate from a decade ago [7][8] - The Hispanic population in the U.S., a key consumer group for avocados, is expected to double by 2050, further driving demand [9] Company Strategy and Development Direction - The company is focused on Project Uno, which aims to unify supply chains and drive synergies across divisions, with over 40 initiatives already in progress [15][65] - The opening of the Jalisco facility for avocado shipments to the U.S. is expected to provide flexibility in managing supply and demand, enhancing margin opportunities [11][43] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2021, including labor shortages and high freight costs, but noted improvements in market conditions as they entered Q1 2022 [5][6] - The long-term outlook remains favorable, although current market conditions make it difficult to predict when inflationary pressures will ease [35] Other Important Information - The company announced a $1.15 per share annual dividend, consistent with the previous year, continuing a tradition since going public in 2002 [6] - The board plans to reduce its size from 11 to 9 directors, aligning with the company's size [16] Q&A Session Summary Question: Can you provide insight on the progression through fiscal 2022 and major milestones for Project Uno? - Management expects proportional benefits from Project Uno each quarter, with investments needed initially to realize these benefits [38] Question: What is the size and expected capacity utilization of the Jalisco facility? - The Jalisco facility is about half the size of the Michoacan facility and is expected to start shipments in April, providing another avenue for supply [43] Question: How are pricing and volume dynamics affecting gross margins? - Higher prices are expected to improve margins, but the company is also focused on increasing volume to lower packing costs [50] Question: What is the outlook for the RFG segment's gross margins? - The closure of the Jacksonville facility is expected to yield annualized savings of $4 million to $6 million, positively impacting gross margins [53] Question: How is the company managing labor costs and pricing in the current environment? - Labor costs have stabilized, and retail partners have been amenable to price increases, allowing the company to manage costs effectively [72]