22:01 | 08.03.2018
Limoneira Company Announces First Quarter Fiscal Year 2018 Financial Results

Limoneira Company (the “Company” or “Limoneira”) (Nasdaq: LMNR), a
leading global agribusiness with prime agricultural land and operations,
real estate and water rights in California, Arizona and Chile today
reported financial results for the first quarter ended January 31, 2018.
Fiscal Year 2018 First Quarter Results
For the first quarter of fiscal year 2018, net revenue increased 12% to
$31.6 million compared to net revenue of $28.1 million in the first
quarter of the previous fiscal year. Agribusiness revenue was $30.3
million, compared to $26.8 million in the first quarter last year,
primarily as the result of higher prices and volume of fresh lemons
sold, as well as an increase in the volume and price of oranges and
other specialty citrus compared to the same period in fiscal year 2017.
Rental operations revenue was $1.3 million in the first quarter of
fiscal years 2018 and 2017.

Agribusiness revenue for the first quarter of fiscal year 2018 includes
$27.8 million in lemon sales, compared to $26.0 million of lemon sales
during the same period of fiscal year 2017, with the increase primarily
the result of higher prices and volume of fresh lemons sold versus the
prior year period. Approximately 912,000 cartons of fresh lemons were
sold during the first quarter of fiscal year 2018 at a $26.32 average
price per carton compared to approximately 909,000 cartons sold at a
$23.10 average price per carton during the first quarter of fiscal year
2017. As anticipated due to the seasonality of the avocado crop, the
Company recognized no avocado revenue in the first quarter of fiscal
years 2018 and 2017. Orange revenue in the first quarter of fiscal year
2018 increased to $1.3 million, compared to $0.5 million in the first
quarter of fiscal year 2017. Specialty citrus and other crop revenues in
the first quarter of fiscal year 2018 experienced similar growth and
were $0.9 million higher than the first quarter of fiscal year 2017
primarily due to increased specialty citrus volume and price.

Total costs and expenses for the first quarter of fiscal year 2018 were
$33.3 million, compared to $31.3 million in the first quarter of last
fiscal year. The first quarter of fiscal year 2018 increase in operating
expenses was primarily attributable to increases in our agribusiness
costs and expenses.

Operating loss for the first quarter of fiscal year 2018 improved to
$1.7 million, compared to a loss of $3.2 million in the first quarter of
the previous fiscal year, with agribusiness revenue growth being the
primary driver of the improvement. Reported net income applicable to
common stock, after preferred dividends, for the first quarter of fiscal
year 2018 was $8.5 million compared to a net loss of $2.2 million in the
first quarter of fiscal year 2017. Reported net income per diluted share
for the first quarter of fiscal year 2018 was $0.58 compared to a net
loss per diluted share of $0.16 for the same period of fiscal year 2017.
Due to the Tax Cuts and Jobs Act of 2017, the Company recognized a
non-cash $10.0 million, or $0.67 per diluted share, one-time tax benefit
associated with the decrease in its deferred tax liability balance
during the first quarter of fiscal year 2018. This tax benefit
represents a provisional amount based on the Company’s current best
estimates. Excluding this non-cash tax benefit, diluted loss per share
for the first fiscal quarter of 2018 was $0.09.

EBITDA was $0.2 million in the first quarter of fiscal year 2018
compared to ($1.3) million in the same period of fiscal year 2017. A
reconciliation of EBITDA to net income (loss) is provided at the end of
this release.
Balance Sheet and Liquidity
During the first quarter of fiscal year 2018, net cash used in operating
activities was $5.1 million compared to a $4.3 million use in the prior
year. For the first quarter of fiscal year 2018, net cash used in
investing activities was $4.0 million compared to a $6.8 million use in
the prior year. Net cash provided by financing activities was $9.1
million in the first quarter of fiscal year 2018 compared to net cash
provided by financing activities of $11.2 million during the same period
last year.

Long-term debt as of January 31, 2018 was $112.4 million, compared to
$102.1 million at the end of fiscal year 2017.
Real Estate Development
On November 10, 2015, the Company entered into a joint venture with The
Lewis Group of Companies (“Lewis”) for the residential development of
its East Area I real estate development project. The first phase of the
project broke ground to commence mass grading on November 8, 2017.
Project plans include approximately 632 residential units in Phase 1. In
December 2017, the Company was granted a Recordation of Final Tract 5854
Map which subdivides the project’s three main parcels of land into legal
lots for the parks, schools, recreations area, commercial areas, open
space, and the backbone streets. The joint venture has begun Phase 1
site improvements and is currently engaged with potential homebuilders
in the lot bidding process, which puts the project on track to close
initial lot sales in the first quarter of fiscal year 2019.

Limoneira Lewis Community Builders, LLC, is a 50%/50% real estate
development joint venture between Limoneira Company and Lewis that will
engage in the residential development of Harvest at Limoneira.
Limoneira expects to receive 25% to 65% of the net cash flows from the
project, based on projected cash flow milestones, which are estimated to
aggregate approximately 70% of total net cash flows to Limoneira,
including Lewis’ $20.0 million investment in the joint venture, and the
balance of net cash flows to The Lewis Group over the estimated seven to
ten-year life of the project. The joint venture’s results of operations
are expected to be recognized by the Company under the equity method of
accounting. The Company contributed $7.5 million to the joint venture in
fiscal year 2017, $2.3 million in fiscal year 2016 and an additional
$3.5 million in the first quarter of fiscal year 2018, matching Lewis’
contributions to fund ongoing development activities.

The Company closed on the sale of the commercial portion of its Sevilla
property and its Centennial property in November and December 2017,
respectively. These property sales had an immaterial impact on results
of operations in the Company’s fiscal first quarter 2018 results.

In February 2013, the Company entered into an option agreement for the
purchase of a 7-acre parcel adjacent to its East Area II commercial real
estate development project. In February 2018, the Company exercised its
option and purchased the property for $3,145,000. This property is
located along the south side of California Highway 126, directly across
from Harvest at Limoneira, and is suited for commercial and/or
industrial development. This property provides essential freeway access
to the project and the Company expects that development of East Area II
will closely follow the build-out of Harvest at Limoneira.
Management Comments
Harold Edwards, President and Chief Executive Officer, stated, “We are
pleased with our first quarter fiscal 2018 results, generating
consolidated revenue growth of 12% and positive EBITDA in a seasonal
soft quarter. Our core citrus business is performing consistent with
plan and we are encouraged by the early results from our strategic
alliance with Suntreat which is advancing our competitiveness in the
orange and specialty citrus category. We continue to seek new avenues to
build upon our One World of CitrusTM marketing
program and improve the availability of fresh citrus to our growing
ranks of global customers.”

Mr. Edwards continued, “We are updating our fiscal 2018 EPS guidance to
reflect the reduction in our federal corporate income tax rate. We
continue to remain confident in our core fundamental business drivers
and are excited about the prospects of our real estate venture, Harvest
at Limoneira, which is in the midst of the important lot bidding
process. We are on schedule with Harvest at Limoneira and expect
to begin generating cash flow at the beginning of fiscal 2019.”
Updating Fiscal Year 2018 Outlook for Tax Rate Benefit
The Company is updating its fiscal year 2018 guidance to include the
expected benefits from the recent Tax Cuts and Jobs Act of 2017 (the
“Act”) that was signed into law. The Act had the effect of lowering the
Company’s effective tax rate from 38.4% in fiscal year 2017 to 28.2%,
which results in an EPS benefit of $0.10 per share for the full fiscal
year of 2018. As such, the Company is raising its fiscal year 2018
adjusted earnings per diluted share guidance by $0.10 to a range of
$0.65 to $0.75 per share. Importantly, this guidance excludes the
one-time deferred tax benefit of $0.67 per diluted share that the
Company recognized in the first fiscal quarter of 2018.

The full impact of the Act will be effective for fiscal year 2018 and
any future adjustments to the first quarter provisional amount will be
included in income tax expense as identified. The provisional amount
incorporates assumptions based upon the Company’s current interpretation
of the Act and may change as the Company receives additional
clarification and guidance implementation and completes its analysis.
Inclusion of the Company’s current provisional amount results in fiscal
year earnings per share guidance of $1.32 to $1.42 per share.

The Company continues to expect to sell between 3.1 million and 3.3
million cartons of fresh lemons at an average price of approximately
$24.50 per carton, and expects to sell approximately 6.0 to 6.5 million
pounds of avocados at approximately $1.30 per pound. The Company expects
operating income for fiscal year 2018 to be approximately $15.7 million
to $17.8 million. Fiscal year 2018 EBITDA is expected to be in the range
of $23.0 million to $25.0 million.

As more fully described at the end of this release under “Non-GAAP
Financial Measures,” the Company is unable to reconcile without
unreasonable effort the above forward-looking non-GAAP measures related
to EBITDA, and the variability of the changes excluded from these
non-GAAP measures may have a significant and potentially unpredictable
impact on its future GAAP financial results.
Conference Call Information
The Company will host a conference call and audio webcast on Thursday,
March 8, 2018, at 1:30 pm Pacific Time (4:30 pm Eastern Time). Investors
interested in participating in the live call can dial (800) 239-9838
from the U.S. International callers can dial (323) 794-2551.
Participants are encouraged to dial in to the conference call ten
minutes prior to the scheduled start time. The call will also be
broadcast live over the Internet and accessible through the Investor
Relations section of the Company’s website at Visitors
to the website should select the “Investor” link to access the
webcast. The webcast will be archived and accessible on the same website
for 30 days following the call. A telephone replay will be available
approximately two hours after the call concludes and will be available
through Thursday, March 22, 2018, by dialing (844) 512-2921 from the
U.S., or (412) 317-6671 from international locations; the passcode is
About Limoneira Company
Limoneira Company, a 125-year-old international agribusiness
headquartered in Santa Paula, California, has grown to become one of the
premier integrated agribusinesses in the world. Limoneira (pronounced lē
mon΄âra) is a dedicated sustainability company with 11,200 acres of rich
agricultural lands, real estate properties, and water rights
in California, Arizona and Chile. The Company is a leading producer of
lemons, avocados, oranges, specialty citrus and other crops that are
enjoyed throughout the world. For more about Limoneira Company, visit
Forward-Looking StatementsThis press release contains forward-looking statements, including
earnings guidance for fiscal year 2018, within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.These
forward-looking statements are based on Limoneira’s current expectations
about future events and can be identified by terms such as “expect,”
“may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,”
“strive to,” and similar expressions referring to future periods.Limoneira believes the expectations reflected in the forward-looking
statements are reasonable but cannot guarantee future results, level of
activity, performance or achievements.Actual results may differ
materially from those expressed or implied in the forward-looking
statements.Therefore, Limoneira cautions you against relying on
any of these forward-looking statements. Factors which may cause future
outcomes to differ materially from those foreseen in forward-looking
statements include, but are not limited to:changes in laws,
regulations, rules, quotas, tariffs and import laws; weather conditions
that affect production, transportation, storage, import and export of
fresh product; increased pressure from crop disease, insects and other
pests; disruption of water supplies or changes in water allocations;
pricing and supply of raw materials and products; market responses to
industry volume pressures; pricing and supply of energy; changes in
interest and currency exchange rates; availability of financing for land
development activities; political changes and economic crises;
international conflict; acts of terrorism; labor disruptions, strikes or
work stoppages; loss of important intellectual property rights;
inability to pay debt obligations; inability to engage in certain
transactions due to restrictive covenants in debt instruments;
government restrictions on land use; and market and pricing risks due to
concentrated ownership of stock.Other risks and uncertainties
include those that are described in Limoneira’s SEC filings which are
available on the SEC’s website at undertakes no obligation to subsequently update or revise
the forward-looking statements made in this press release, except as
required by law.Non-GAAP Financial Measures
Due to significant depreciable assets associated with the nature of our
operations and interest costs associated with our capital structure,
management believes that earnings before interest, income taxes,
depreciation and amortization (“EBITDA”) and adjusted EBITDA, which
excludes impairments on real estate development assets when applicable,
is an important measure to evaluate our Company’s results of operations
between periods on a more comparable basis. Such measures are widely
used by analysts, investors and lenders as well as by management in
assessing our Company’s financial performance and business trends
relating to our results of operations and financial condition. These
measurements are not prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”) and should not be construed as an
alternative to reported results determined in accordance with GAAP. The
non-GAAP information provided is unique to our Company and may not be
consistent with methodologies used by other companies. With respect to
our expectations under “Updating Fiscal Year 2018 Outlook for Tax Rate
Benefit” above, the Company has not provided a reconciliation of
forward-looking non-GAAP measures, primarily due to variability and
difficulty in making accurate forecasts and projections, as not all of
the information necessary for a quantitative reconciliation is available
to the Company without unreasonable efforts. EBITDA is summarized and
reconciled to net income (loss) which management considers to be the
most directly comparable financial measure calculated and presented in
accordance with GAAP as follows (in thousands):


Three months ended January 31,



Net income (loss) attributable to Limoneira Company






Interest expense, net



Income taxes





Depreciation and amortization















Limoneira CompanyConsolidated Balance Sheets (unaudited)
($ in thousands, except share amounts)


January 31,
October 31,


Current assets:






Accounts receivable, net



Cultural costs



Prepaid expenses and other current assets



Income taxes receivable





Total current assets




Property, plant and equipment, net



Real estate development



Equity in investments



Investment in Calavo Growers, Inc.



Other assets





Total Assets





Liabilities and stockholders’ equity

Current liabilities:

Accounts payable





Growers payable



Accrued liabilities



Fair value of derivative instrument



Current portion of long-term debt





Total current liabilities



Long-term liabilities:

Long-term debt, less current portion



Deferred income taxes



Other long-term liabilities



Sale-leaseback deferral





Total liabilities




Commitments and contingencies

Series B Convertible Preferred Stock – $100 par value (50,000 shares
authorized: 14,790 shares issued and outstanding at January 31, 2018
and October 31, 2017) (8.75% coupon rate)



Series B-2 Convertible Preferred Stock – $100 par value (10,000
shares authorized: 9,300 shares

issued and outstanding at January 31, 2018 and October 31, 2017)
(4% dividend rate on liquidation value of $1,000 per share)




Stockholders’ equity:

Series A Junior Participating Preferred Stock – $.01 par value
(20,000 shares authorized: zero issued or outstanding at January 31,
2018 and October 31, 2017)


Common Stock – $.01 par value (39,000,000 shares authorized:
14,532,952 and 14,405,031 shares issued and outstanding at January
31, 2018 and October 31, 2017, respectively)



Additional paid-in capital



Retained earnings



Accumulated other comprehensive income



Noncontrolling interest





Total stockholders’ equity





Total Liabilities and Stockholders’ Equity






Limoneira CompanyConsolidated Statements of Operations (unaudited)
($ in thousands, except share amounts)


Three months ended

January 31,

Net revenues:






Rental operations



Real estate development





Total net revenues



Costs and expenses:




Rental operations



Real estate development



Selling, general and administrative







Total costs and expenses







Operating loss





Other income (expense):

Interest expense, net





Equity in earnings of investments



Other income, net







Total other expense








Loss before income tax benefit






Income tax benefit







Net income (loss)




Net loss attributable to noncontrolling interest






Net income (loss) attributable to Limoneira Company




Preferred dividends







Net income (loss) attributable to common stock









Basic net income (loss) per common share










Diluted net income (loss) per common share









Dividends per common share








Weighted-average common shares outstanding-basic



Weighted-average common shares outstanding-diluted




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