Limoneira Company (LMNR) H2 2007 earnings summary

Executive summary

• FY2007 operating profit reached a record $18.851M, up 20% YoY, despite a severe January freeze that cut avocado production and reduced citrus output.

• Diversification beyond agriculture drove growth in housing and commercial operations, organic recycling, and investments; management forecast lower overall operating profit in FY2008.

Financial highlights

• Revenue was $34.440M vs. $36.558M in FY2006; net income was $2.307M vs. $3.486M, including discontinued-operation losses of $245K and $929K, respectively.

• Net income applicable to common stock was $2.045M; basic and diluted EPS was $1.85 vs. $2.84, while common dividends remained $2.25/share.

• Net cash from operating activities was $9.638M vs. $8.228M; cash and cash equivalents ended FY2007 at $486K.

• Reported SG&A included a $3.187M non-cash senior-management stock grant expense and nearly $2M of community-development investment costs.

Outlook and guidance

• FY2008 operating profit forecast down 18% overall: agribusiness down 8%, housing and commercial up 7%, and investment earnings down 54%.

• Avocado production forecast at 3.8M pounds for FY2008 vs. 3.964M in FY2007; lasting freeze damage and conservative lemon-market assumptions tempered the outlook.

• Management expected adequate earnings and cash flow to fund FY2008 initiatives and sustain quarterly and annual dividends; real-estate project profits were conservatively anticipated in 2009.