Limoneira(US:LMNR)2021-06-09 02:06Financial Data and Key Metrics Changes - The company reported a 14% increase in second quarter topline growth and a significant improvement in adjusted EBITDA, which rose to $6 million from a loss of $100,000 in the same period last year [9][10][26] - Total net revenue for the second quarter of fiscal year 2021 was $45.1 million, compared to $39.6 million in the same quarter of the previous fiscal year [18][26] - Net income applicable to common stock was $1.8 million, a turnaround from a net loss of $5 million in the same quarter of fiscal year 2020 [23][24] Business Line Data and Key Metrics Changes - Agribusiness revenue increased to $44 million from $38.4 million year-over-year, driven by higher Fresh Lemon sales of $28.7 million compared to $25.3 million [11][18][19] - Fresh Lemon average price per carton rose to $18.79 from $17.14, with utilization rates improving to 75%-80% compared to 50%-55% in the prior year [12][19] - Avocado revenue improved to $2.7 million from $2 million, while Orange revenue decreased to $1.4 million from $2.7 million due to lower volume [20][21] Market Data and Key Metrics Changes - The company is experiencing a recovery in domestic food service and export sales as dining out increases due to COVID-19 vaccine distribution [9] - The company expects to see improved year-over-year results due to increasing demand from food service and export markets [15][32] Company Strategy and Development Direction - The company is focusing on expanding its retail footprint and improving cost control measures, with expectations of positive cash flow from its real estate project, Harvest at Limoneira, starting in fiscal year 2022 [15][34] - Plans to plant an additional 250 acres of lemons in the next two years are expected to increase domestic supply significantly [33][34] Management's Comments on Operating Environment and Future Outlook - Management noted that the COVID-19 pandemic continues to impact the food service business globally, but signs of improvement are emerging [31] - The company is optimistic about maintaining fresh utilization levels and expects to navigate supply challenges effectively [46][59] - Management expressed confidence in the potential for increased cash distributions from Harvest at Limoneira and the development of a medical campus [35][36] Other Important Information - Long-term debt as of April 30, 2021, was $128.2 million, up from $122.6 million at the end of fiscal year 2020 [30] - The company received $5 million in federal tax refunds related to the CARES Act and expects additional state refunds [30] Q&A Session Summary Question: Thoughts on recent lemon price increases - Management acknowledged a $2 increase in average lemon prices per carton and highlighted improved fresh utilization as a key factor [38][39] Question: Outlook for Argentina operations - Management indicated that they are well-positioned to meet market demand despite challenges in logistics and weather [40][42] Question: Ability to handle increased food service demand - Management anticipates a supply-side challenge rather than a demand-side challenge and is focused on maintaining realistic commitments to customers [46][47] Question: Potential upside from Harvest at Limoneira - Management discussed opportunities for additional housing units and the potential for increased cash distributions from the project [50][54] Question: Fresh utilization rate expectations - Management expects to maintain fresh utilization rates in the 75%-80% range for the remainder of the year [56][59] Question: International market improvements and supply chain challenges - Management noted that export markets are gradually returning to normal, with domestic demand seeing significant increases [66][70] Question: Water rights outlook amid drought conditions - Management expressed confidence in their ability to irrigate and maintain agricultural production, while monitoring water rights closely [72][74] Question: Intentions regarding Calavo's stake in the company - Management indicated that Calavo does not currently intend to liquidate its position and sees significant upside in their ownership [78][79]