Calavo Growers (CVGW) Q3 2024 earnings summary

Executive summary

• Net sales increased 12% year-over-year to $179.6 million, driven by strong avocado demand and pricing, despite supply disruptions from Mexico.

• Gross profit declined 9% to $20.1 million, with margin pressure in both Grown and Prepared segments.

• Net loss attributable to Calavo was $0.7 million, compared to net income of $6.6 million in the prior year, mainly due to discontinued operations and a $9.3 million goodwill impairment.

• Sale of the Fresh Cut business completed in August 2024 for $83 million, with proceeds used to retire all remaining debt.

• Quarterly dividend doubled to $0.20 per share, reflecting confidence in core business and improved financial performance.

Financial highlights

• Net sales for the nine months ended July 31, 2024 rose 9% to $491.6 million.

• Gross profit for the nine months increased 7% to $51.5 million.

• Adjusted EBITDA from continuing operations was $13.5 million for the quarter, up from $13.0 million a year ago.

• Adjusted net income from continuing operations was $10.2 million for the quarter, up from $7.7 million in the prior year.

• Diluted EPS from continuing operations was $0.30 for the quarter, down from $0.48 last year; adjusted EPS was $0.57.

Outlook and guidance

• Proceeds from the Fresh Cut sale are expected to support shareholder returns and investment in core business growth.

• Management expects continued momentum and improvement in the Prepared segment in Q4 as input costs recede and new guacamole products launch.

• The company believes liquidity and cash flow are sufficient to meet foreseeable capital and operational needs.