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8-K - FORM 8-K - CALAVO GROWERS INC | v59685e8vk.htm |
Exhibit 99.1
For:
|
Calavo Growers, Inc. (Nasdaq-GS: CVGW) | |
Contact:
|
Calavo Growers, Inc. | |
Lee E. Cole | ||
Chairman, President and CEO | ||
(805) 525-1245 |
CALAVO GROWERS, INC. ANNOUNCES
FISCAL 2011 SECOND QUARTER OPERATING RESULTS
FISCAL 2011 SECOND QUARTER OPERATING RESULTS
Highlights Include:
| Revenues Rise Nine Percent to $118.7 Million from $109.2 One Year Earlier | ||
| Higher Fresh Avocado Sales Pace Top-Line Growth |
Subsequent Event:
| Company Successfully Concludes Previously Disclosed Acquisition for Renaissance Food Group (RFG), LLC | ||
| Deal Expected to Be Immediately Accretive to Results |
SANTA PAULA, Calif. (June 6, 2011)Calavo Growers, Inc. (Nasdaq-GS: CVGW) today reported that
fiscal 2011 second quarter revenues rose nearly nine percent from the corresponding period last
year on the strength of higher fresh avocado sales. Net income in the most recent quarter was
lower, however, due principally to high costs in the companys prepared avocado business resulting
from insufficient fruit volume in the marketplace and weather-related delays of fresh tomato
shipments.
For the three months ended April 30, 2011, Calavo recorded net income of $2.4 million, equal
to $0.16 per diluted share, on revenues of $118.7 million. This compares with net income of $4.8
million, or $0.33 per diluted share, on $109.2 million in revenues during the year-earlier second
quarter. Gross margin equaled $9.4 million, or 7.9 percent of revenues, versus $13.1 million,
equal to 12.0 percent of revenues, in the fiscal 2010 second quarter.
For the first six months ended April 30, 2011, net income totaled $4.7 million, or $0.32 per
diluted share, versus $7.1 million, or $0.49 per diluted share, in the initial six months last
year. Initial six-month revenues rose 19
- more -
Calavo Growers Reports Fiscal 2011 Second Quarter Results/2-2-2
percent to $210.0 million from $176.5 million in the corresponding period last year. Gross margin
approximated $18.1 million, or 8.6 percent of revenues, which compares with $22.0 million, or 12.4
percent, in the fiscal 2010 first half.
Chairman, President and Chief Executive Officer Lee E. Cole stated: Calavo continues to
execute its operating plan well. Our second quarter results instead reflect fluctuations inherent
to our Fresh and Calavo Foods segments: adverse weather and cyclically higher fruit costs which
resulted in a drag on margins in our prepared avocado business. The impact of these two factors,
as well as the lower volume of fresh avocados, account primarily for the difference in our
second-quarter operating performance year over year.
Cole continued: Insufficient volume in the marketplace at present is creating over-reliance
on fruit sourced from Mexico and causing avocado prices to surge. These high prices are indicative
of the strong industry demand for fresh avocados, but have precisely the opposite effect on our
prepared guacamole business: soaring fruit costs are constraining margins in that segment.
Second quarter Fresh product segment revenues grew 11 percent to $107.7 million from $97.2
million in the like period of fiscal 2010. The aforementioned higher sales of fresh avocados paced
results and worked to offset a 25 percent total unit volume decrease in the Fresh segment resulting
primarily from the delayed tomato harvest and tight avocado supply. Fresh product gross margin
totaled $7.6 million, equal to 7.1 percent of segment revenues, in the most recent quarter. This
compares with segment gross margin of $9.7 million, or 10.0 percent of Fresh product sales, in the
second quarter of fiscal 2010.
Second quarter sales in the Calavo Foods business segment equaled $11.1 million, which compare
with $12.0 million in the corresponding period last year. Segment gross margin in the most recent
period totaled $1.8 million, or 16.2 percent of revenues. This compares with segment gross margin
in last years second quarter of $3.3 million, which equaled 27.9 percent of Calavo Foods revenues.
- more -
Calavo Growers Reports Fiscal 2011 Second Quarter Results/3-3-3
Referencing other developments in the Calavo Foods business unit, Cole said that following the
close of the second quarter, a leading grocery chain began selling the companys Salsa Lisa product
line at 1,500 locations nationwide. We continue to expand distribution of our outstanding line-up
of fresh refrigerated premium salsas and the growing acceptance among retailers and consumers is
encouraging, Cole commented.
Also with respect to Calavo Foods and as previously announced, the company successfully
completed on June 1, 2011, its transaction for Renaissance Food Group (RFG), LLC, a fast-growing
fresh-food company that produces, markets and distributes nationally a range of healthy,
high-quality product offerings via the retail channel. The newly acquired company will operate as
a wholly owned subsidiary of Calavo Foods, significantly extending its current portfolio of all
natural guacamole, the Salsa Lisa line, guacamole hummus and stone-ground tortilla chips.
Cole stated: The acquisition of RFG is a game-changer for Calavo. We immediately re-shape
our companyand, specifically, our Calavo Foods business unitinto a significant competitor in
the rapidly expanding fresh refrigerated packaged goods category through an array of products for
both the produce and deli departments of grocery retailers. The extensive current portfolio of RFG
productsfresh-cut fruit, as well as ready-to-eat and recipe-ready vegetables, to name just a few
itemsare highly complementary to Calavo Foods and our company provides a strong platform and
resources to facilitate future growth.
The Calavo CEO continued: Through RFG, we gain entrée to a high-demand grocery category, a
capable management team with demonstrated ability to grow the acquired company, and recognizable
brands including Garden Highway and Chef Essentials®. Furthermore, RFGs rapid product-development
capabilities are impressive and we expect to leverage that strength further, as well as the new
subsidiarys ability to supply retailers with high-quality goods through just-in-time delivery
nationwide on a same- or next-day basis.
- more -
Calavo Growers Reports Fiscal 2011 Second Quarter Results/4-4-4
Cole reiterated that, even while Calavo invests in future growth, the company remains focused
on cost containment and folding additional revenues into existing infrastructure.
To that end, selling, general and administrative (SG&A) expense in the most recent quarter
rose modestly to $5.6 million from $5.5 million in the fiscal 2010 second quarter, while supporting
nearly $10 million in additional sales. SG&A for the fiscal 2011 second quarter also includes
approximately $305,000 in acquisition-related expenses associated with Calavos purchase of RFG.
SG&A as a percentage of total net sales in the most recent quarter equaled 4.7 percent versus 5.0
percent in the year-earlier second period. SG&A as a percentage of total gross margin equaled 59.8
percent in the fiscal 2011 second quarter which compares to 41.7 percent one year ago. The
year-to-year difference is attributable to sharply higher avocado costs and lower fresh produce
total unit volume.
The Outlook Moving Forward
CEO Cole said that he views the second half of 2011 with considerable excitement and
enthusiasm.
First and foremost, the addition of RFG into the company will have a transformative impact on
our Calavo Foods business unit. We anticipate the new subsidiary will begin contributing to Calavo
revenues and profit during the last two months of the current quarter.
Cole continued: In the Fresh product segment, the company expects to continue realizing on
its top line the benefits of higher fresh avocado sales in the third and fourth quarters. Avocado
sales are anticipated to remain robust, pointing to the industrys underlying strength, despite a
smaller seasonal crop which will keep supply constrained and demand high. We expect these high
fresh avocado prices to moderate midway through Calavos fiscal fourth quarter.
- more -
Calavo Growers Reports Fiscal 2011 Second Quarter Results/5-5-5
Diversified fresh produce items will contribute incremental unit volume
which at best will be in line with last year, although prices are trending lower than in the fiscal
2010 third quarter, Cole added.
Turning to Calavo Foods, Cole stated: High fruit prices will continue to challenge the gross
margins of our fresh guacamole and other prepared avocado products in the second half of this year.
With the expected fourth-quarter loosening of the avocado supply, we anticipate a commensurate
improvement in margins in our prepared avocado business.
Cole concluded: With Calavos diverse revenue and profit drivers and focused implementation
of its strategic agenda, I expect the company to register a successful second half and fiscal 2011
operating performance.
About Calavo
Calavo Growers, Inc. is the worldwide leader in the procurement and
marketing of fresh avocados and commodity produce, as well as the
manufacturing and distribution of prepared avocado and other food products,
including refrigerated fresh salsa and guacamole hummus. Founded in 1924,
Calavos expertise in marketing and distributing avocados, processed avocados,
and other perishable products enables it to serve food distributors, produce
wholesalers, supermarkets and restaurants on a global basis.
Safe Harbor Statement
This news release contains statements relating to future events and results
of Calavo (including certain projections and business trends) that are forward-looking statements
as defined in the Private Securities Litigation Reform Act of
1995. Actual results and events may differ from those projected as a result of
certain risks and uncertainties. These risks and uncertainties include but are not
limited to: increased competition, conducting substantial amounts of business
internationally, pricing pressures on agricultural products, adverse weather
- more -
Calavo Growers Reports Fiscal 2011 Second Quarter Results/6-6-6
and growing conditions confronting avocado growers, new governmental
regulations, as well as other risks and uncertainties detailed from time to time in
the companys Securities and Exchange Commission filings, including, without
limitation, the companys Annual Report on Form 10-K for the year ended
October 31, 2010. These forward-looking statements are made only as of the
date hereof, and the company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise.
# # #
CALAVO GROWERS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
April 30, | October 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,370 | $ | 1,064 | ||||
Accounts receivable, net of allowances
of $1,590 (2011) and $1,372 (2010) |
41,101 | 31,743 | ||||||
Inventories, net |
21,820 | 14,831 | ||||||
Prepaid expenses and other current assets |
5,429 | 8,424 | ||||||
Advances to suppliers |
671 | 1,598 | ||||||
Income taxes receivable |
1,904 | 1,816 | ||||||
Deferred income taxes |
2,336 | 2,336 | ||||||
Total current assets |
74,631 | 61,812 | ||||||
Property, plant, and equipment, net |
42,341 | 41,059 | ||||||
Investment in Limoneira Company |
38,046 | 34,986 | ||||||
Investment in unconsolidated entities |
2,256 | 2,016 | ||||||
Goodwill |
4,085 | 4,085 | ||||||
Other assets |
4,702 | 6,240 | ||||||
$ | 166,061 | $ | 150,198 | |||||
Liabilities and shareholders equity |
||||||||
Current liabilities: |
||||||||
Payable to growers |
$ | 14,068 | $ | 11,208 | ||||
Trade accounts payable |
2,291 | 2,839 | ||||||
Accrued expenses |
12,781 | 15,353 | ||||||
Short-term borrowings |
24,360 | 8,150 | ||||||
Dividend payable |
| 8,092 | ||||||
Current portion of long-term obligations |
1,371 | 1,369 | ||||||
Total current liabilities |
54,871 | 47,011 | ||||||
Long-term liabilities: |
||||||||
Long-term obligations, less current portion |
6,053 | 6,089 | ||||||
Deferred income taxes |
9,381 | 8,266 | ||||||
Total long-term liabilities |
15,434 | 14,355 | ||||||
Commitments and contingencies |
||||||||
Noncontrolling interest |
524 | 575 | ||||||
Total Calavo Growers shareholders equity |
95,232 | 88,257 | ||||||
$ | 166,061 | $ | 150,198 | |||||
CALAVO GROWERS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
Three months ended | Six months ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales |
$ | 118,720 | $ | 109,219 | $ | 210,039 | $ | 176,539 | ||||||||
Cost of sales |
109,300 | 96,133 | 191,950 | 154,578 | ||||||||||||
Gross margin |
9,420 | 13,086 | 18,089 | 21,961 | ||||||||||||
Selling, general and administrative |
5,635 | 5,455 | 10,650 | 10,619 | ||||||||||||
Operating income |
3,785 | 7,631 | 7,439 | 11,342 | ||||||||||||
Interest expense |
(235 | ) | (234 | ) | (439 | ) | (463 | ) | ||||||||
Other income, net |
458 | 467 | 684 | 732 | ||||||||||||
Income before provision for income taxes |
4,008 | 7,864 | 7,684 | 11,611 | ||||||||||||
Provision for income taxes |
1,634 | 3,090 | 3,020 | 4,563 | ||||||||||||
Net income |
2,374 | 4,774 | 4,664 | 7,048 | ||||||||||||
Add: Net loss noncontrolling interest |
30 | 19 | 51 | 19 | ||||||||||||
Net income attributable to Calavo Growers, Inc. |
$ | 2,404 | $ | 4,793 | $ | 4,715 | $ | 7,067 | ||||||||
Calavo Growers, Inc.s net income per share: |
||||||||||||||||
Basic |
$ | 0.16 | $ | 0.33 | $ | 0.32 | $ | 0.49 | ||||||||
Diluted |
$ | 0.16 | $ | 0.33 | $ | 0.32 | $ | 0.49 | ||||||||
Calavo Growers, Inc.s shares used in per
share computation: |
||||||||||||||||
Basic |
14,726 | 14,572 | 14,724 | 14,538 | ||||||||||||
Diluted |
14,734 | 14,598 | 14,731 | 14,562 | ||||||||||||
CALAVO GROWERS, INC.
NET SALES AND GROSS MARGIN BY BUSINESS SEGMENT (UNAUDITED)
(All amounts in thousands)
NET SALES AND GROSS MARGIN BY BUSINESS SEGMENT (UNAUDITED)
(All amounts in thousands)
Fresh | Calavo | |||||||||||
products | Foods | Total | ||||||||||
(All amounts are presented in thousands) | ||||||||||||
Six months ended April 30, 2011 |
||||||||||||
Net sales |
$ | 188,306 | $ | 21,733 | $ | 210,039 | ||||||
Cost of sales |
174,559 | 17,391 | 191,950 | |||||||||
Gross margin |
$ | 13,747 | $ | 4,342 | $ | 18,089 | ||||||
Six months ended April 30, 2010 |
||||||||||||
Net sales |
$ | 153,584 | $ | 22,955 | $ | 176,539 | ||||||
Cost of sales |
139,024 | 15,554 | 154,578 | |||||||||
Gross margin |
$ | 14,560 | $ | 7,401 | $ | 21,961 | ||||||
For six months ended April 30, 2011 and 2010, inter-segment sales and cost of sales for Fresh
products totaling $8.6 million and $7.6 million were eliminated. For six months ended April 30,
2011 and 2010, inter-segment sales and cost of sales for Calavo Foods totaling $5.8 million and
$4.4 million were eliminated.
Fresh | Calavo | |||||||||||
products | Foods | Total | ||||||||||
(All amounts are presented in thousands) | ||||||||||||
Three months ended April 30, 2011 |
||||||||||||
Net sales |
$ | 107,650 | $ | 11,070 | $ | 118,720 | ||||||
Cost of sales |
100,021 | 9,279 | 109,300 | |||||||||
Gross margin |
$ | 7,629 | $ | 1,791 | $ | 9,420 | ||||||
Three months ended April 30, 2010 |
||||||||||||
Net sales |
$ | 97,247 | $ | 11,972 | $ | 109,219 | ||||||
Cost of sales |
87,506 | 8,627 | 96,133 | |||||||||
Gross margin |
$ | 9,741 | $ | 3,345 | $ | 13,086 | ||||||
For three months ended April 30, 2011 and 2010, inter-segment sales and cost of sales for
Fresh products totaling $4.3 million and $3.9 million were eliminated. For three months ended
April 30, 2011 and 2010, inter-segment sales and cost of sales for Calavo Foods totaling $2.8
million and $2.2 million were eliminated.