SANTA PAULA, Calif. (Sept. 1, 2010)—Calavo Growers, Inc. (Nasdaq-GS: CVGW), a global leader in avocado marketing and an expanding provider of other
perishable items and prepared foods, today reported that fiscal 2010 third quarter net income advanced 141 percent on an eight percent increase in revenues. Eclipsing the previous all-time highs set last quarter, the record results reflect higher fresh and prepared avocado product sales, as well as growth in iversified perishable produce.
For the three months ended July 31, 2010, net income rose to $5.9 million, equal to $0.41 per diluted share, from $2.5 million, or $0.17 per diluted share, in
the third quarter last year. Revenues in the most recent quarter climbed to $114.6 million from $106.3 million in the corresponding period one-year earlier.
Gross margin in the fiscal 2010 third quarter grew 54 percent to a record $15.3 million, which compares with $9.9 million in the same period last year. Income from operations reached $9.8 million, a new quarterly high and an increase of 139 percent from $4.1 million posted in the fiscal 2009 third quarter.
Fiscal year to date, Calavo registered new historic highs for revenues, gross margin, net income, and per share results. Net income for the nine months
ended July 31, 2010 climbed to a $13.0 million, equal to $0.89 per diluted share, a 15 percent increase from $11.3 million, or $0.78 per diluted share in the like
period of fiscal 2009. Revenues rose 10 percent to $291.1 million for the most recent nine months from $263.8 million in the initial three quarters of fiscal
2009. Gross margin advanced to $37.2 million, a five percent increase from $35.3 million in the year-earlier nine-month period.
Calavo Chairman, President and CEO Lee E. Cole stated: “Our company continues to successfully execute our unit-driven business model—moving
additional volumes through existing infrastructure and continuing to diversify our sourcing and product line-ups. The most recent results are both gratifying and in line with current-year expectations.”
Fresh Product segment sales in the most recent quarter totaled $100.7 million, a six percent increase from $94.7 million in the fiscal 2009 third period. A 43 percent increase in total units in Calavo’s Fresh Product segment drove sales, paced by avocado volumes that rose 47 percent year over year.
Additionally, higher tomato and papaya unit volumes provided solid incremental revenue and gross profit contribution to the most recent Fresh Product segment results. Segment gross margin rose nearly two-fold to $12.7 million, or 12.7 percent of revenue, from $6.4 million, or 6.8 percent of revenue, in the fiscal 2009 third period.
Third-quarter sales in the CalavoFoods business segment advanced 20 percent to $13.9 million from $11.6 million in the year-earlier period. Segment sales benefited from volume growth of both ultra-high-pressure guacamole and other prepared avocado products. Gross margin in the segment for the most recent period totaled $2.5 million, or 18.2 percent of revenues. This compares with $3.5 million in gross margin during the fiscal 2009 third quarter, which equaled 30 percent of segment sales. Segment gross margin in the most recent quarter was constrained by the effects of higher costs for Mexican avocados used in Calavo’s prepared products.
Cole stated: “While this year’s strong avocado demand is the principal driver of our formidable results, Calavo’s diversified fresh operations—most
notably tomatoes and papayas—are performing extraordinarily well. In the tomato category, specifically, we are realizing the benefits of multiple growing
sources to capitalize on market opportunities and meet customer requirements.
“Moreover, an expanding available avocado supply is being met by rising demand. We view this as promising indication that market growth is not a onetime anomaly owing to crop size, but rather, a permanent effect of industry promotion, demographic shifts and awareness of the health benefits. It bodes well for the avocado industry and Calavo longer term.”
Turning to CalavoFoods, Cole said: “Our progress in developing the CalavoFoods business segment and an exciting portfolio of new products progresses well. The company’s guacamole hummus is being sold on an exclusive basis through a leading national grocery chain under a one-year agreement. In its first full quarter as majority-owned subsidiary, Calavo Salsa Lisa made strides in building scale operationally and is starting to expand distribution. In short, we are working diligently to expand this business segment with a line of quality products to complement fresh commodity produce and further leverage our infrastructure.”
Cole singled out the company’s selling, general and administrative (SG&A) expense—which remains unchanged for the most recent quarter and the year to date—as indication of Calavo’s ability to drive sales and profit growth without incurring significant increases in operating costs.
The Outlook Moving Forward Commenting on the balance of fiscal 2010, Cole said: “We enter the final quarter of the year in a very enviable position as reflected by our results in the first nine months.
“From all indications, the fresh avocado harvest will continue to be substantial, with a total estimated supply of around 1.3 billion pounds, propelled
by an abundant California supply and augmented by our other established sources in Mexico and Chile.
“The diversified portfolio of perishable produce rounds out our Fresh Product segment very nicely. We have built a solid foundation for profitable sales
and expect that trend to continue.”
The CEO continued: “The CalavoFoods product lineup, anchored by our successful prepared avocado items, will continue to gain traction during the
balance of this fiscal year and well into next. Calavo Salsa Lisa and its delicious refrigerated fresh salsas, as well our guacamole hummus, are areas of
considerable potential and we proceed on course in these categories.
“Similarly, we are routinely exploring opportunities to fold in additional products that can enhance our brand, as well as present viable prospects for
revenue and profit growth. “We are confident about our prospects for the remainder of fiscal 2010 and look forward to concluding Calavo’s most successful year ever,” Cole concluded.
Source: Calavo Growers Inc.
