Limoneira Co (NASDAQ: LMNR) Q2 2025 Earnings Call | 06/10/2025

• Sunkist Partnership: Limoneira announced a significant strategic move to merge its citrus sales and marketing operations with Sunkist Growers, effective in Q1 fiscal year 2026.
  • Benefits: This partnership is expected to improve supply chain efficiency, significantly reduce costs by approximately $5 million annually in selling and marketing expenses (improving EBITDA by the same amount), and provide access to top foodservice and retail customers.
  • Operational Integration: Limoneira's sales and marketing personnel will transfer to Sunkist, and they will utilize Sunkist's excess wash and storage capacity.
  • Impact on Revenue: The citrus brokerage business will transition to Sunkist, reducing Limoneira's top-line revenue but strengthening its operational capabilities and cost structure for sustainable EBITDA growth.
  • Market Position: This collaboration will allow Limoneira to offer a full category of citrus, providing a more comprehensive solution to retailers.
• Shareholder Value Creation: The company remains committed to a multifaceted approach to shareholder value creation, including:
  • Avocado Business: Continues planting as one of the largest U.S. growers, maintaining its current handler structure.
  • Real Estate Development: "Harvest at Limonera" project shows strong home sales velocity, potentially accelerating Phase 3.
  • Water Monetization: Two transactions are expected to close this year.
  • Asset Divestiture: Focused on divesting farming assets in Chile and the Windfall Farms vineyard in Paso Robles.

Second Quarter Fiscal Year 2025 Financial Results (Seasonal Context is Key):

• Total Net Revenue: $35.1 million, down from $44.6 million in Q2 FY2024.
  • Agribusiness Revenue: $33.6 million, primarily affected by a temporarily oversupplied lemon market causing significant pricing pressure. Relief is expected in H2 FY2025 due to seasonal improvements and market share gains.
  • Other Operations Revenue: $1.5 million, up from $1.3 million.
• Lemon Sales: 1.4 million cartons of U.S. packed fresh lemons sold at an average price of $14.52 per carton, compared to 1.4 million cartons at $17.85 in prior year.
• Avocado Revenue: $2.8 million from 1.2 million pounds sold at an average price of $2.26 per pound, up from $1.47 in prior year. A significant portion of the harvest was postponed to Q3 for more favorable pricing.
• Orange Revenue: $1.6 million from 92,000 cartons sold at an average price of $17.07.
• Total Costs & Expenses: Decreased by 22% to $38.5 million.
• Operating Loss: Improved to a loss of $3.3 million from $4.7 million in prior year.
• Net Loss (Applicable to Common Stock): $3.5 million (or $0.20 per diluted share), compared to a net income of $6.4 million ($0.35 per diluted share) in prior year, largely due to a significant one-time equity in earnings from a real estate joint venture sale in Q2 FY2024.
• Adjusted EBITDA: Loss of $167,000, compared to a gain of $16.6 million in prior year.
• Balance Sheet: Long-term debt at quarter-end was $54.9 million (net debt of $52.9 million). Received a $10 million cash distribution from the real estate joint venture in April 2025.

Fiscal Year 2025 Outlook & Long-Term Growth Pipeline:

• Fresh Lemon Volume: Adjusted down to 4.5 million to 5 million cartons (from 5 million to 5.5 million).
• Avocado Volume: Maintained at 7 million to 8 million pounds, lower than FY2024 due to the alternate bearing nature of avocado trees.
• Future Growth Drivers:
  • Expected to receive an additional $155 million from real estate development (Harvest and East Area 2) over the next six fiscal years.
  • Expanding avocado production by 2,000 acres by end of FY2027, anticipating significant EBITDA enhancement as trees mature.
  • The Sunkist partnership is projected to lead to increased packinghouse utilization (potentially 4 to 4.5 million cartons in FY2026, though early guidance), higher packing margins per carton, and improved grower recruitment.