Limoneira Company (LMNR) H2 2016 earnings summary

Executive summary

• FY2016 was a record year: revenue rose 11% to $111.8M, operating income doubled to $9.2M, EBITDA increased 30% to $20.1M, and net income reached $8.1M.

• Growth was led by higher lemon volumes and avocado production; the new lemon packinghouse and expanding non-bearing acreage positioned operations for additional capacity and future earnings.

• Priorities included scaling citrus sales, advancing Harvest at Limoneira, expanding rental income, and reinvesting development proceeds into agribusiness.

Financial highlights

• FY2016 revenue was $111.789M versus $100.311M in FY2015; net income was $8.058M versus $7.082M, and diluted EPS was $0.52 versus $0.46.

• Operating income increased to $9.188M from $4.583M; cash from operations rose 86% to $14.3M from $7.7M.

• Agribusiness revenue grew 12% to $106.1M; lemon revenue rose 8% to $85.3M and other agribusiness revenue increased 29% to $20.9M.

• Non-recurring items included a $3.4M gain on Calavo shares, a $1.0M conservation-easement gain, and $1.2M of Harvest joint-venture transaction costs; combined net impact was ~$3.2M.

Outlook and guidance

• FY2017 fresh lemon sales forecast: 3.1–3.5M cartons at an average $23/carton, split 50% internally grown and 50% third-party sourced.

• FY2017 avocado sales forecast: 8.5–9.0M pounds at ~$0.80/lb; Mexican supply into the U.S. may affect prices.

• Harvest at Limoneira grading was expected to start spring 2017, with initial lot sales near year-end 2017 and first homes available by end-2018.

• Long-term objectives: EBITDA above $40M, EBITDA margin above 20%, EPS above $1, project ROIC above 12%, overall ROIC in double digits, and leverage of 3x–4x.