Limoneira Company (LMNR) H2 2015 earnings summary

Executive summary

• FY2015 revenue fell 3% to $100.3M and operating income declined $5.3M to $4.6M; net income rose to $7.1M, or $0.46/share, helped by asset-sale gains.

• Drought, weather-related fruit quality and lower orange pricing challenged results, while major packing, orchard, housing and development investments positioned operations for FY2016.

Financial highlights

• Revenue was $100.3M vs. $103.5M in FY2014; total costs and expenses increased $2.1M to $95.7M.

• Operating income was $4.6M vs. $9.9M; net income was $7.1M vs. $7.0M and diluted EPS was $0.46 in both years.

• Other income was $6.5M, including a $5.0M gain on sale of Calavo shares and a $0.9M Wilson Ranch gain; these non-recurring gains supported net income despite lower operating income.

• Adjusted EBITDA was $15.4M vs. $14.5M in FY2014; FY2015 EBITDA was $15.4M, with no real estate impairment adjustment.

• Operating cash flow was $7.7M vs. $16.1M; investing cash use was $25.8M and financing cash provided was $18.1M.

Outlook and guidance

• FY2016 operating income was projected to increase significantly, with higher income expected across lemons, avocados, oranges and specialty crops, plus increased rental revenue.

• Lemon operating income was expected to benefit from new packing-house savings on similar volume to FY2015; avocado income from a larger crop, orange income from Sheldon lease savings, and specialty crops from better pistachio production.

• The new packing facility was expected to reduce packing costs by $1/carton; once new fruit reaches the facility, projected annual savings were ~$4M versus packing it in the old facility.

• Management expected cash flows and existing credit capacity to cover FY2016 capital expenditures, debt service, working capital and other contractual obligations.