Limoneira Company (LMNR) H2 2017 earnings summary

Executive summary

• FY17 revenue rose 9% to $121.3M and operating income increased 29% to $11.9M; net income attributable to shareholders fell to $6.6M from $8.1M.

• Lemon packing efficiency and growth in lemon volume supported results; weather delayed Arizona lemon harvests and navel orange harvesting, while real estate development moved into construction.

Financial highlights

• FY17 net revenue was $121.3M vs. $111.8M in FY16; operating income was $11.9M vs. $9.2M.

• Net income attributable to shareholders was $6.6M vs. $8.1M; basic and diluted EPS were $0.42 vs. $0.52. FY16 included $4.4M of combined Calavo stock and conservation easement gains, less $1.2M in real estate JV transaction costs.

• Adjusted EBITDA was $19.0M in FY17, including a $0.1M real estate impairment add-back, vs. EBITDA of $20.1M in FY16.

• Net cash from operations increased to $18.5M from $14.3M; investing cash outflow was $26.4M and financing cash inflow was $8.4M.

Outlook and guidance

• FY18 liquidity needs, capital expenditures and debt service expected to be met by operating cash flows and available credit; investing outlays can be adjusted to manage liquidity.

• Expected FY18 avocado harvest: 6.0–6.5M pounds; 1,600 non-bearing lemon acres and planned 500 additional acres are expected to add production, targeting 3M cartons of own-grown lemons by 2021.

• Harvest at Limoneira lot sales were expected to begin in spring 2018, with initial closings anticipated in FY19; estimated project cash flow to the venture partner is ~$100M over 7–10 years, including $20M already received.

• Tax reform was preliminarily expected to significantly reduce the effective tax rate and net deferred federal tax liabilities, with effects to enter statements in the quarter ending January 31, 2018.