Limoneira Company (LMNR) Stephens 26th Annual Investment Conference | NASH2024 summary

Business overview and strategic evolution

• Founded in 1893, the company has evolved from diversified crops to focus on citrus and avocados, with significant real estate and water assets in a prime California location.

• Shifted strategy to reduce lemon production, expand avocado acreage, and grow asset-light services for other growers.

• Asset-light model now emphasizes packing, marketing, and selling for outside growers, targeting higher margins and reduced capital intensity.

• Real estate and water assets are increasingly valuable, with water rights and land development offering significant monetization opportunities.

• Farm management services are being developed, leveraging technology and expertise, with a focus on complementary offerings rather than direct competition.

Recent performance and operational highlights

• Strong avocado crop and favorable market dynamics led to record pricing and improved Adjusted EBITDA.

• Avocado production is set to double to 30 million pounds, aiming to become California's largest producer.

• Lemon business faces global oversupply, prompting a pivot to sourcing from outside growers and focusing on quality and yield.

• Packing and marketing services for outside growers now comprise 80% of the citrus business, with ambitions to grow supply chains to 15 million cartons.

• Technology investments, such as automated irrigation and drone spraying, are improving crop consistency and operational efficiency.

Financial position and capital allocation

• Deleveraged balance sheet after major real estate sales, now at net zero debt with significant cash inflows expected over the next five to seven years.

• Maintenance CapEx is low, with future investments likely focused on avocado-related acquisitions or packing capacity, especially in Chile.

• EBITDA forecasted at $50–$70 million within three to five years, with potential for share buybacks, dividend increases, and further real estate monetization.

• Real estate and water assets are valued between $550 million and $700 million, with ongoing efforts to maximize shareholder value through strategic alternatives.