Calavo Growers, Inc. Announces Fourth Quarter and Fiscal Year 2024 Financial Results

SANTA PAULA, Calif., Jan. 14, 2025 (GLOBE NEWSWIRE) -- Calavo Growers, Inc. (Nasdaq-GS: CVGW), a global avocado-industry leader and provider of value-added fresh food, today reported its financial results for the fiscal fourth quarter and fiscal year ended October 31, 2024.

Introductory Note: In the first quarter of 2024, we concluded that the Fresh Cut (formerly RFG) business met the requirements to be classified as held for sale and discontinued operations. As a result, the financial results of that business are reported as discontinued operations in this press release. The divestiture of the Fresh Cut business occurred on August 15, 2024. Prior to the decision to divest our Fresh Cut business, the Company's Prepared reporting segment included the Fresh Cut business unit and our guacamole business. The Fresh Cut business unit is no longer included in our Prepared business segment in this press release. Retrospective reclassifications have been made to prior period financial statements and commentary in this press release to present the Fresh Cut business unit as a discontinued operation. Unless otherwise noted, the amounts and commentary included in this press release relate to our continuing operations.

Fiscal Year 2024 Financial Overview

• Total net sales increased 11.4% to $661.5 million from the prior year
  • Grown segment net sales increased 13.3% to $597.6 million
  • Prepared segment net sales decreased 4.2% to $63.9 million
• Total gross profit increased 8.3% to $67.8 million from the prior year
  • Grown segment gross profit increased 9.4% to $55.3 million
  • Prepared segment gross profit increased 3.8% to $12.5 million
• Net income from continuing operations of $6.8 million, or $0.38 per diluted share, compared to net income from continuing operations of $5.1 million, or $0.26 per diluted share, for the prior year.
• Adjusted net income of $18.7 million, or $1.05 per diluted share, compared to adjusted net income of $11.5 million, or $0.64 per diluted share, for the prior year
• Adjusted EBITDA of $37.0 million, compared to $33.2 million for the prior year

• Total net sales increased 19.5% to $170.0 million from the prior year quarter
  • Grown segment net sales increased 23.4% to $154.6 million
  • Prepared segment net sales decreased 9.4% to $15.3 million
• Total gross profit increased 14.2% to $16.3 million from the prior year quarter
  • Grown segment gross profit increased 24.1% to $14.3 million
  • Prepared segment gross profit decreased 27.6% to $2.0 million
• Net loss from continuing operations of $2.5 million, or $(0.14) per diluted share, compared to a net loss from continuing operations of $4.7 million, or $(0.26) per diluted share, for the prior year quarter
• Adjusted net income of $0.8 million, or $0.05 per diluted share, compared to an adjusted net loss of $0.4 million, or $(0.02) per diluted share, for the prior quarter
• Adjusted EBITDA of $6.7 million compared to $8.0 million for the prior year quarter

Management Commentary

"We made good progress in 2024 improving our financial performance and executing our strategy,” said Lee Cole, President and Chief Executive Officer of Calavo Growers, Inc. "Both our top and bottom-line results grew compared to 2023, with net sales increasing approximately 11%, net income from continuing operations increasing approximately 36%, and adjusted EBITDA increasing approximately 11%. Additionally, adjusted net income increased $0.41 per share from the prior year.”

"In the first quarter of 2024, we made the strategic decision to sharpen our focus on our core avocado and guacamole operations, leading to the sale of our Fresh Cut business, which we finalized in August 2024. By divesting Fresh Cut, we enhanced our core operations and streamlined our corporate structure to deliver meaningful reductions in SG&A expenses. The sale of Fresh Cut also strengthened our balance sheet by reducing debt and generating a strong cash position, which helped us to reward investors with a higher dividend that we plan to maintain in 2025.”

"Turning to our financial performance for the fourth fiscal quarter, we saw our net loss from continuing operations improve by approximately 48% as compared to the same prior quarter period, driven primarily by favorable movements in our tax rate. Adjusted EBITDA for the same periods, however, declined by approximately 16%, primarily reflecting an increase in incentive compensation. Total gross profit rose by approximately 14% during the quarter, supported by stronger avocado margins in the Grown segment. However, this improvement was partially offset by higher fruit input costs in our Prepared segment.”

"We are entering fiscal 2025 with strong momentum. Our strategic focus on operational optimization, disciplined execution, and leveraging organic growth opportunities positions us well for sustained success. With double-digit growth anticipated in avocado and guacamole sales volumes, as well as overall revenue, we believe that our initiatives will drive meaningful value creation for shareholders in fiscal 2025 as compared to fiscal 2024. Our confidence is grounded in the strength of our growth drivers - new customer acquisition, product innovations, deeper penetration within existing accounts, and expanded global sourcing strategies. We believe the scalability of our supply chain gives us an advantage in delivering the sales volume growth. Supported by a focus on cost discipline and efficiencies in SG&A expenses, these factors position us for a strong year of revenue growth, profitability, and enhanced shareholder returns in 2025.”

Fourth Quarter 2024 Consolidated Financial Review

Total net sales for the fourth quarter of 2024 were $170.0 million, an increase of 19.5% compared to $142.2 million for the fourth quarter of 2023. Net sales in the Grown segment increased by 23.4%, while net sales in the Prepared segment decreased by 9.4%. The average selling price of avocados in the Grown segment rose by 16% compared to the same period prior year.

Gross profit for the fourth quarter was $16.3 million, or 9.6% of net sales, compared to $14.3 million, or 10.0% of net sales, for the same period last year.

Selling, general and administrative (SG&A) expenses for the fourth quarter totaled $13.0 million, or 7.7% of net sales, compared to $9.3 million and 6.5% of net sales for the same period last year. The increase from the prior year was related primarily to higher legal and outside service-related expenses of $1.0 million for investigation-related expenses in addition to higher incentive compensation expenses.

Net loss from continuing operations for the fourth quarter was $2.5 million, or $(0.14) per diluted share. This compares with a net loss from continuing operations of $4.7 million, or $(0.26) per diluted share, for the same period last year.

Adjusted net income was $0.8 million, or $0.05 per diluted share, compared to adjusted net loss of $0.4 million, or $(0.02) per diluted share last year.

Adjusted EBITDA was $6.7 million compared to $8.0 million for the same period last year.

Segment Performance

Grown

Gross profit in the Grown segment increased to $14.3 million, compared to $11.5 million in the prior year quarter. This improvement was primarily driven by a 10% increase in avocado volume and higher margins per case. Average avocado prices were approximately 16% higher than the same period in the prior year. Avocado performance has been and is expected to remain steady throughout the first quarter. We anticipate adequate volume in January to meet Super Bowl demand despite USDA limitations on inspection hours in Mexico and isolated pest challenges in Michoacan. We remain confident in our supply chain and our ability to fulfill demand during this peak consumption period. While tomato volumes are projected to decline, pricing improvements and stronger margins on purchased tomatoes should deliver double-digit growth in tomato gross profit during fiscal year 2025 as compared to fiscal year 2024.

Prepared

Gross profit in the Prepared segment declined to $2.0 million from $2.7 million in the prior year quarter, with gross margin decreasing from 16.1% to 12.9%. This decline was primarily driven by higher fruit costs compared to the prior year quarter; however, costs gradually stabilized following the summer price surge. Looking ahead, we remain focused on expanding our guacamole business and have introduced several exciting new products for retail consumers during the fiscal fourth quarter. We expect double-digit sales volume growth for fiscal year 2025, as compared to fiscal year 2024, and higher gross margins through improved operational efficiencies.

Balance Sheet and Liquidity

The Company ended the year with cash and cash equivalents of $57.0 million and $108.8 million of available liquidity. The Company had no borrowings under its credit facility and had total debt of $5.1 million consisting of other long-term obligations and finance leases as of October 31, 2024.

Non-GAAP Financial Measures

This press release includes non-GAAP measures EBITDA, adjusted EBITDA, adjusted net income (loss) and adjusted net income (loss) per diluted share, which are not prepared in accordance with U.S. generally accepted accounting principles, or "GAAP.” EBITDA is defined as net income (loss) from continuing operations attributable to Calavo Growers, Inc. excluding (1) interest income and expense, (2) income tax (benefit) provision, (3) depreciation and amortization and (4) stock-based compensation expense. Adjusted EBITDA is EBITDA with further adjustments for (1) non-cash net losses (income) recognized from unconsolidated entities, (2) goodwill impairment, (3) write-off of long-lived assets, (4) acquisition-related costs, (5) restructuring-related costs, including certain severance costs, (6) certain litigation, internal investigation and other related costs, (7) foreign currency gain (loss) and (8) one-time items. We believe adjusted EBITDA affords investors a different view of the overall financial performance of the Company than adjusted net income (loss) and the GAAP measure of net income (loss) from continuing operations. The adjustments to calculate EBITDA and adjusted EBITDA are items recognized and recorded under GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded.

Adjusted net income (loss) is defined as net income (loss) from continuing operations attributable to Calavo Growers, Inc. excluding (1) non-cash net losses recognized from unconsolidated entities, (2) goodwill impairment, (3) write-off of long-lived assets, (4) acquisition-related costs, (5) restructuring-related costs, including certain severance costs, (6) certain litigation, internal investigation and other related costs, (7) foreign currency loss (gain) and (8) one-time items. Adjusted net income (loss) and the related measure of adjusted net income (loss) per diluted share exclude certain items that are recognized and recorded under GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded. We believe adjusted net income (loss) affords investors a different view of the overall financial performance of the Company than adjusted EBITDA and the GAAP measure of net income (loss) from continuing operations.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the financial tables below. Items are considered one-time in nature if they are non-recurring, infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. Non-GAAP information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP. None of these metrics are presented as measures of liquidity. The way the Company measures EBITDA, adjusted EBITDA and adjusted net income (loss) may not be comparable to similarly titled measures presented by other companies and may not be identical to corresponding measures used in Company agreements.

About Calavo Growers, Inc.

Calavo Growers, Inc. (Nasdaq: CVGW) is a global leader in the processing and distribution of avocados, tomatoes, papayas and guacamole. Calavo products are sold under the trusted Calavo brand name, proprietary sub-brands, private label and store brands. Founded in 1924, Calavo has a rich culture of innovation, sustainable practices and market growth. The company serves retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers worldwide. Calavo is headquartered in Santa Paula, California, with facilities throughout the U.S. and Mexico. Learn more about The Family of Fresh™ at calavo.com.

Safe Harbor Statement

This press release contains statements relating to future events and results of Calavo (including financial projections and business trends) that are "forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, that involve risks, uncertainties, and assumptions. These statements are based on our current expectations and are not promises or guarantees. If any of the risks or uncertainties materialize or the assumptions prove incorrect, the results of Calavo may differ materially from those expressed or implied by such forward-looking statements and assumptions. The use of words such as "anticipates,” "estimates,” "expects,” "projects,” "intends,” "plans” and "believes,” among others, generally identify forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including, but not limited to, any projections of revenue, gross profit, expenses, income/(loss) from unconsolidated entities, earnings, earnings per share, tax provisions, cash flows and currency exchange rates; the impact of acquisitions or debt or equity investments or other financial items; any statements of the plans, strategies and objectives of management for future operations, including execution of restructuring and integration (including information technology systems integration) plans; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on Calavo and its financial performance; statements regarding pending internal or external investigations, legal claims or tax disputes; and any statements of expectation or belief; any statements about future risks associated with doing business internationally (including possible restrictive U.S. and foreign governmental actions, such as restrictions on transfers of funds, restrictions as a result of trade protection measures such as import/export/customs duties, tariffs and/or quotas).

Risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied by the forward-looking statements include, but are not limited to, the following: the ability of our management team to work together successfully; the impact of weather on market conditions; seasonality of our business; sensitivity of our business to changes in market prices of avocados and other agricultural products and other raw materials including fuel, packaging and paper; changes or actions associated with USDA-APHIS and the Mexican Secretary of Agriculture, Secretariat of Agriculture and Rural Development (SADER) phytosanitary regulations (certification regulation for the importation of Hass avocados to the United States); potential disruptions to our supply chain; risks associated with potential future acquisitions, including integration; potential exposure to data breaches and other cyber-attacks on our systems or those of our suppliers or customers; dependence on large customers; dependence on key personnel and access to labor necessary for us to render services; susceptibility to wage inflation; potential for labor disputes; reliance on co-packers for a portion of our production needs; competitive pressures, including from foreign growers; risks of recalls and food-related injuries to our customers; changing consumer preferences; the impact of environmental regulations, including those related to climate change; risks associated with the environment and climate change, especially as they may affect our sources of supply; our ability to develop and transition new products and services and enhance existing products and services to meet customer needs, including but not limited to the new guacamole products referenced in this press release; risks associated with doing business internationally (including possible non-compliance with U.S. and foreign laws applicable to international trade and dealings and possible restrictive U.S. and foreign governmental actions, such as restrictions on transfers of funds and trade protection measures such as import/export/customs duties, tariffs and/or quotas and currency fluctuations); risks associated with receivables from, loans to and/or equity investments in unconsolidated entities; volatility in the value of our common stock; the impact of macroeconomic trends and events; the effects of increased interest rates on our cost of borrowing and consumer purchasing behavior; the resolution of pending internal and external investigations, legal claims and tax disputes, including an assessment imposed by the Mexican Tax Administrative Service (the "SAT”) and our defenses against collection activities commenced by the SAT; and our ability to realize the expected expense savings from the sale of the Fresh Cut business.

For further discussion of these risks and uncertainties and other risks and uncertainties that we face, please see the risk factors described in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent updates that may be contained in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Forward-looking statements contained in this press release are made only as of the date of this press release, and we undertake no obligation to update or revise the forward-looking statements, whether because of new information, future events or otherwise.