Limoneira(US:LMNR)2022-03-11 02:14Financial Data and Key Metrics Changes - Total net revenue for Q1 2022 was $39.3 million, a 3% increase from $38.3 million in Q1 2021 [10][21] - Agribusiness revenue was $38.1 million, up from $37.1 million in the same period last year [12][21] - Operating loss increased to $9.6 million in Q1 2022 from a loss of $5.6 million in Q1 2021 [28] - Net loss applicable to common stock was $6.6 million, compared to a net loss of $4.3 million in the prior year [28] - Adjusted net loss was $6.2 million, compared to a loss of $4.4 million in the same period last year [29] Business Line Data and Key Metrics Changes - Fresh lemon sales generated $24.7 million in Q1 2022, down from $25 million in Q1 2021, with an average price per carton of $20.48 compared to $18.91 [12][22] - Avocado revenue was $800,000 in Q1 2022, compared to no revenue in the same period last year, with 365,000 pounds sold at an average price of $2.10 per pound [15][24] - Orange revenue decreased to $900,000 from $1.1 million year-over-year, with 53,000 cartons sold at an average price of $16.42 [15][25] - Specialty citrus and other crop revenues decreased to $900,000 from $1.8 million in the prior year [26] Market Data and Key Metrics Changes - The lemon industry is facing an oversupply due to larger tree crops in California and Arizona, and reduced demand from Asian markets, operating at about 50% of pre-COVID levels [13][14] - The overall tree crop is estimated to be about 25% larger year-on-year, equating to approximately 10 million additional cartons [63] Company Strategy and Development Direction - The company is raising its avocado volume guidance for FY 2022 from 5 million to 6 million pounds to 6 million to 7 million pounds [32] - The real estate development project, Harvest at Limoneira, is expected to generate $95 million in cash flow, up from a previous estimate of $80 million, due to land value appreciation [17][34] - The company is expanding its product offerings through the One World of Citrus program to attract more customers [33] Management's Comments on Operating Environment and Future Outlook - Management expects continued top and bottom line growth for the remaining nine months of FY 2022 despite challenges from supply chain inflation and oversupply [31] - Lemon pricing is expected to remain pressured until the Asian export market recovers [32] - The company is optimistic about improved domestic demand and anticipates a return to pre-pandemic growth levels in Asian markets [101] Other Important Information - The company recorded approximately $770,000 in one-time severance costs related to the departure of a senior executive [27] - Long-term debt increased to $142.1 million as of January 31, 2022, from $130.4 million at the end of FY 2021 [30] Q&A Session Summary Question: Impact of supply chain costs on lemon pricing and margin recovery - Management acknowledged that inflationary pressures are challenging margins, compounded by oversupply and reduced demand due to the pandemic [41][42] Question: Cash flow expectations from Harvest at Limoneira - The company indicated that land value appreciation and new development opportunities could lead to further increases in cash flow expectations [45][50] Question: Supply-demand dynamics between California crop increase and Asian demand shortfall - Management estimated that California's crop is about 25% larger year-on-year, while Asian demand has decreased by approximately 5 million cartons [63][64] Question: Water rights and monetization opportunities - The company is exploring ways to monetize water rights, including a fallowing program that allows water to be used for other purposes [79][81] Question: Volume impact of Argentinian fruit not going to Russia - Management noted that the volume impact is uncertain, but they handled about 20% of all imported fruit from Argentina last year, equating to around 1 million cartons [91][92]