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Limoneira(LMNR) - 2025 Q2 - Earnings Call Transcript
LMNRLimoneira(LMNR)2025-06-09 21:30

Financial Data and Key Metrics Changes - For Q2 FY2025, total net revenue was 35.1million,downfrom35.1 million, down from 44.6 million in Q2 FY2024, reflecting a decline in agribusiness revenue due to market oversupply and pricing pressure [14][15] - Adjusted EBITDA for Q2 FY2025 was a loss of 167,000comparedtoagainof167,000 compared to a gain of 16.6 million in the same period last year [19] - Net loss applicable to common stock for Q2 FY2025 was 3.5million,comparedtonetincomeof3.5 million, compared to net income of 6.4 million in Q2 FY2024 [18] Business Line Data and Key Metrics Changes - Agribusiness revenue for Q2 FY2025 was 33.6million,downfrom33.6 million, down from 43.3 million in the same period last year, primarily due to lower fresh lemon sales [14][15] - Fresh packed lemon sales were 19.7millioninQ2FY2025,comparedto19.7 million in Q2 FY2025, compared to 25.8 million in Q2 FY2024, with an average price per carton dropping from 17.85to17.85 to 14.52 [15] - Avocado revenue increased to 2.8millioninQ2FY2025from2.8 million in Q2 FY2025 from 2.3 million in Q2 FY2024, with an average price per pound rising from 1.47to1.47 to 2.26 [16] Market Data and Key Metrics Changes - The company expects relief from current market conditions in the second half of the year as it gains market share and benefits from seasonal pricing improvements [15] - The citrus sales and marketing plan with Sunkist is anticipated to enhance resilience to market volatility and improve cost structure [15][23] Company Strategy and Development Direction - The company is merging its citrus sales and marketing operations with Sunkist Growers, which is expected to save approximately 5millionannuallyinsellingandmarketingexpensesandimproveEBITDAbythesameamount[6][7]−ThepartnershipwithSunkistaimstoenhanceoperationalcapabilitiesandcreateaunifiedsystemtoservefoodserviceandretailcustomersmoreeffectively[9][10]−Thecompanyremainscommittedtogrowingitscitrusbusinessandexpandingavocadoproductionwhileadvancingrealestatedevelopmentandwatermonetizationinitiatives[12][23]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceintheoperationalenhancementsandstrategicinitiativesthatwillcontributetosustainablelong−termshareholdervalue[12][25]−ThecompanyanticipatesfreshlemonvolumesforFY2025tobebetween4.5millionto5millioncartons,downfrompreviousestimates,whileavocadovolumesareexpectedtoremainstable[22][23]−ManagementhighlightedtheimportanceofthepartnershipwithSunkistinstrengtheningthecitrusbusinessmodelandimprovingoperationalfoundations[23][24]OtherImportantInformation−TotalcostsandexpensesforQ2FY2025decreasedby225 million annually in selling and marketing expenses and improve EBITDA by the same amount [6][7] - The partnership with Sunkist aims to enhance operational capabilities and create a unified system to serve food service and retail customers more effectively [9][10] - The company remains committed to growing its citrus business and expanding avocado production while advancing real estate development and water monetization initiatives [12][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational enhancements and strategic initiatives that will contribute to sustainable long-term shareholder value [12][25] - The company anticipates fresh lemon volumes for FY2025 to be between 4.5 million to 5 million cartons, down from previous estimates, while avocado volumes are expected to remain stable [22][23] - Management highlighted the importance of the partnership with Sunkist in strengthening the citrus business model and improving operational foundations [23][24] Other Important Information - Total costs and expenses for Q2 FY2025 decreased by 22% to 38.5 million compared to 49.3millioninthesameperiodlastyear[17]−Long−termdebtasofApril30,2025,was49.3 million in the same period last year [17] - Long-term debt as of April 30, 2025, was 54.9 million, up from $40 million at the end of FY2024 [20] Q&A Session Summary Question: Can you elaborate on the Sunkist deal and its impact on revenue? - Management confirmed that the brokered fruit business will be phased out, but party cartons will continue to run through their facility [26][27] Question: What are the per box economics of the Sunkist partnership? - The partnership will transition to a fixed cost model for sales and marketing, reducing costs and improving margins due to streamlined operations [28][29] Question: How is the avocado harvest expected to perform this year? - Management indicated favorable weather conditions and a strategy to delay harvest for better fruit size and pricing [34][35] Question: Will there be an increase in avocado yield from recent plantings? - Early plantings are ahead of schedule, with expectations for increased yield by FY2026 [38]