Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Oct. 31, 2023 | Nov. 30, 2023 | Apr. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Oct. 31, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 000-33385 | ||
Entity Registrant Name | CALAVO GROWERS, INC | ||
Entity Incorporation, State or Country Code | CA | ||
Entity Tax Identification Number | 33-0945304 | ||
Entity Address, Address Line One | 1141-A Cummings Road | ||
Entity Address, City or Town | Santa Paula | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 93060 | ||
City Area Code | 805 | ||
Local Phone Number | 525-1245 | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | CVGW | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0.5 | ||
Entity Common Stock, Shares Outstanding | 17,798,620 | ||
Entity Central Index Key | 0001133470 | ||
Current Fiscal Year End Date | --10-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | Deloitte & Touche LLP | ||
Auditor Location | Los Angeles, California | ||
Auditor Firm ID | 34 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 2,091 | $ 2,060 |
Restricted cash | 761 | 1,074 |
Accounts receivable, net of allowances of $5,245 (2023) and $4,199 (2022) | 61,376 | 59,016 |
Inventories | 39,430 | 38,830 |
Prepaid expenses and other current assets | 13,934 | 8,868 |
Advances to suppliers | 14,684 | 12,430 |
Income taxes receivable | 1,094 | 3,396 |
Total current assets | 133,370 | 125,674 |
Property, plant, and equipment, net | 112,729 | 113,310 |
Operating lease right-of-use assets | 48,033 | 54,518 |
Investments in unconsolidated entities | 2,902 | 3,782 |
Deferred income tax assets | 3,010 | 5,433 |
Goodwill | 28,653 | 28,653 |
Intangibles, net | 5,698 | 7,206 |
Other assets | 52,459 | 47,170 |
Total assets | 386,854 | 385,746 |
Current liabilities: | ||
Payable to growers | 14,788 | 20,223 |
Trade accounts payable | 15,537 | 10,436 |
Accrued expenses | 31,108 | 51,795 |
Other current liabilities | 11,000 | 11,000 |
Current portion of term loan | 647 | |
Current portion of operating leases | 7,062 | 6,925 |
Current portion of long-term obligations and finance leases | 1,604 | 1,574 |
Total current liabilities | 81,746 | 101,953 |
Long-term liabilities: | ||
Borrowings pursuant to line of credit, long-term | 35,024 | 1,200 |
Long-term portion of term loan | 3,416 | |
Long-term portion of operating leases | 45,393 | 52,140 |
Long-term portion of obligations and finance leases | 5,647 | 4,447 |
Deferred income tax liabilities | 746 | |
Other long-term liabilities | 4,653 | 2,635 |
Total long-term liabilities | 94,879 | 60,422 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock ($0.001 par value, 100,000 shares authorized; 17,761 (2023) and 17,732 (2022) shares issued and outstanding) | 18 | 18 |
Additional paid-in capital | 176,481 | 171,223 |
Noncontrolling interest | 1,392 | 1,015 |
Retained earnings | 32,338 | 51,115 |
Total shareholders' equity | 210,229 | 223,371 |
Total liabilities and shareholders' equity | $ 386,854 | $ 385,746 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Allowances of accounts receivable | $ 5,245 | $ 4,199 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 17,761 | 17,732 |
Common stock, shares outstanding | 17,761 | 17,732 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Net sales | $ 971,948 | $ 1,191,073 | $ 1,055,830 |
Cost of sales | 901,992 | 1,117,228 | 998,405 |
Gross profit | 69,956 | 73,845 | 57,425 |
Selling, general and administrative | 66,400 | 65,482 | 56,463 |
Expenses related to Mexican tax matters | 3,128 | 1,417 | 1,797 |
Impairment and charges related to Florida facility closure | 959 | 9,162 | |
Operating income | 428 | 5,987 | (9,997) |
Interest income | 605 | 500 | 335 |
Interest expense | (2,495) | (1,686) | (798) |
Other income, net | 316 | 1,017 | 1,016 |
Recovery on reserve for FreshRealm note receivable and impairment of investment | 6,130 | ||
Unrealized net income (loss) on Limoneira shares | (8,605) | 3,858 | |
Income (loss) before income taxes and loss from unconsolidated entities | (1,146) | (2,787) | 544 |
Income tax expense | (5,942) | (3,251) | (10,747) |
Net loss from unconsolidated entities | (879) | (564) | (1,719) |
Net loss | (7,967) | (6,602) | (11,922) |
Add: Net loss (income) attributable to noncontrolling interest | (377) | 353 | 104 |
Net loss attributable to Calavo Growers, Inc. | $ (8,344) | $ (6,249) | $ (11,818) |
Calavo Growers, Inc.'s net loss per share: | |||
Basic (in dollars per shares) | $ (0.47) | $ (0.35) | $ (0.67) |
Diluted (in dollars per shares) | $ (0.47) | $ (0.35) | $ (0.67) |
Number of shares used in per share computation: | |||
Basic | 17,750 | 17,663 | 17,621 |
Diluted | 17,750 | 17,663 | 17,621 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Noncontrolling Interest | Total |
Beginning balance at Oct. 31, 2020 | $ 18 | $ 165,000 | $ 89,512 | $ 1,472 | $ 256,002 |
Beginning balance, shares at Oct. 31, 2020 | 17,661 | ||||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings | (817) | (817) | |||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings (in shares) | 25 | ||||
Stock-based compensation | 3,950 | 3,950 | |||
Dividends declared to shareholders | (20,330) | (20,330) | |||
Avocados de Jalisco noncontrolling interest | (104) | (104) | |||
Net loss attributable to Calavo Growers, Inc. | (11,818) | (11,818) | |||
Ending balance at Oct. 31, 2021 | $ 18 | 168,133 | 57,364 | 1,368 | 226,883 |
Ending balance, shares at Oct. 31, 2021 | 17,686 | ||||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings | (49) | (49) | |||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings (in shares) | 46 | ||||
Stock-based compensation | 3,139 | 3,139 | |||
Avocados de Jalisco noncontrolling interest | (353) | (353) | |||
Net loss attributable to Calavo Growers, Inc. | (6,249) | (6,249) | |||
Ending balance at Oct. 31, 2022 | $ 18 | 171,223 | 51,115 | 1,015 | 223,371 |
Ending balance, shares at Oct. 31, 2022 | 17,732 | ||||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings | 48 | 48 | |||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings (in shares) | 29 | ||||
Stock-based compensation | 5,210 | 5,210 | |||
Dividends declared to shareholders | (10,433) | (10,433) | |||
Avocados de Jalisco noncontrolling interest | 377 | 377 | |||
Net loss attributable to Calavo Growers, Inc. | (8,344) | (8,344) | |||
Ending balance at Oct. 31, 2023 | $ 18 | $ 176,481 | $ 32,338 | $ 1,392 | $ 210,229 |
Ending balance, shares at Oct. 31, 2023 | 17,761 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (PARENTHETICAL) - $ / shares | 12 Months Ended | |||||
Sep. 01, 2023 | Jul. 11, 2023 | Apr. 06, 2023 | Dec. 14, 2022 | Oct. 31, 2023 | Oct. 31, 2021 | |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | ||||||
Dividend paid (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.2875 | $ 0.4875 | $ 1.15 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Cash Flows from Operating Activities: | |||
Net loss | $ (7,967) | $ (6,602) | $ (11,922) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 17,282 | 16,589 | 17,571 |
Non-cash operating lease expense | 38 | 20 | 83 |
Net loss from unconsolidated entities | 879 | 564 | 1,719 |
Realized and unrealized net loss on Limoneira shares | 8,605 | (3,858) | |
Divesture of Calavo Salsa Lisa | 624 | ||
Impairment and non-cash charges related to closure of Florida facility | 317 | 9,748 | |
Recovery from reserve for FreshRealm note receivable and impairment of investment | (6,130) | ||
Provision for uncollectible Mexican IVA taxes receivable | 2,474 | ||
Stock-based compensation expense | 5,210 | 3,139 | 3,950 |
Gain on sale of Temecula packinghouse | (216) | (216) | (216) |
Loss on disposal of property, plant, and equipment | 40 | 186 | (170) |
Deferred income taxes | 1,851 | (117) | (2,526) |
Effect on cash of changes in operating assets and liabilities: | |||
Accounts receivable, net | (2,360) | 19,850 | (15,024) |
Inventories | (989) | 1,837 | 412 |
Prepaid expenses and other current assets | (5,466) | (147) | 3,567 |
Advances to suppliers | (1,326) | (4,677) | (1,632) |
Income taxes receivable/payable | 3,620 | 8,128 | (933) |
Other assets | (7,594) | (4,961) | (7,831) |
Payable to growers | (5,435) | (2,809) | 11,687 |
Trade accounts payable, accrued expenses and other liabilities | (15,131) | 10,527 | 15,077 |
Net cash provided by (used in) operating activities | (14,466) | 50,233 | 13,572 |
Cash Flows from Investing Activities: | |||
Purchases of property, plant, and equipment | (10,694) | (9,769) | (11,438) |
Loan to Agricola Belher | (3,500) | ||
Proceeds received from Limoneira stock sales | 18,450 | ||
Proceeds received from FreshRealm Separation Agreement recovery | 6,000 | ||
Proceeds received on repayment of infrastructure loan | 900 | ||
Infrastructure advance to tomato growers | (1,326) | ||
Net cash provided by (used in) investing activities | (10,694) | 8,681 | (9,364) |
Cash Flows from Financing Activities: | |||
Payment of dividend to shareholders | (10,433) | (20,330) | (20,343) |
Proceeds from revolving credit facilities | 256,912 | 267,200 | 334,850 |
Payments on revolving credit facilities | (223,089) | (303,700) | (317,700) |
Payments of debt issuance cost | (693) | ||
Payments of minimum withholding taxes on net share settlement of equity awards | (96) | (864) | |
Proceeds from term loan | 4,063 | ||
Proceeds from sale leaseback | 240 | ||
Payments on long-term obligations and finance leases | (1,930) | (1,996) | (1,398) |
Proceeds from stock option exercises | 48 | 47 | 47 |
Net cash provided (used in) by financing activities | 24,878 | (58,635) | (5,408) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (282) | 279 | (1,200) |
Cash, cash equivalents and restricted cash, beginning of period | 3,134 | 2,855 | 4,055 |
Cash, cash equivalents and restricted cash, end of period | 2,852 | 3,134 | 2,855 |
Supplemental Information: | |||
Interest | 2,492 | 1,482 | 687 |
Income taxes | 1,492 | 2,601 | 3,047 |
Noncash Investing and Financing Activities: | |||
Right of use assets obtained in exchange for new financing lease obligations | 2,814 | 611 | 1,430 |
Settlement of Agricola Belher infrastructure advance offset against payable to growers | 928 | 1,060 | |
Property, plant, and equipment included in trade accounts payable and accrued expenses | $ 1,794 | $ 160 | $ 312 |
Description of the business
Description of the business | 12 Months Ended |
Oct. 31, 2023 | |
Description of the business | |
Description of the business | 1. Description of the business Business Calavo Growers, Inc. (referred to in this report as “Calavo”, the “Company”, “we’, “us” or “our”), is a global leader in the avocado industry and a provider of value-added fresh food. Our expertise in marketing and distributing avocados, prepared avocado products, and other perishable foods allows us to deliver a wide array of fresh and prepared food products to retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers on a worldwide basis. We procure avocados from California, Mexico and other growing regions around the world. Through our various operating facilities, we (i) sort, pack, and/or ripen avocados, tomatoes and/or Hawaiian grown papayas, (ii) create, process and package a portfolio of healthy fresh foods including fresh-cut fruit and vegetables, and prepared foods and (iii) process and package guacamole. We distribute our products both domestically and internationally and we report our operations in different business segments: Grown and Prepared. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation and Significant Accounting Policies | 2. Basis of Presentation and Significant Accounting Policies The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. Our consolidated financial statements include the accounts of Calavo Growers, Inc. and our wholly owned subsidiaries, Calavo de Mexico S.A. de C.V. (Calavo de Mexico), Calavo Growers de Mexico, S. de R.L. de C.V. ( Calavo Growers de Mexico), Maui Fresh International, Inc. (Maui), Hawaiian Sweet, Inc. (HS), CW Hawaii Pride, LLC (HP), Renaissance Food Group, LLC (RFG), and Avocados de Jalisco, S.A.P.I. de C.V. (Avocados de Jalisco), in which we have an 83% ownership interest. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to valuation allowances for valuation allowances for accounts, goodwill, grower advances, inventories, long-lived assets, valuation of and estimated useful lives of identifiable intangible assets, stock-based compensation, promotional allowances and income taxes. On an ongoing basis, management reviews its estimates based upon currently available information. Actual results could differ materially from those estimates. Cash and Cash Equivalents We consider all highly liquid financial instruments purchased with an original maturity date of three months or less to be cash equivalents. The carrying amounts of cash and cash equivalents approximate their fair values. Restricted Cash We have $0.8 million and $1.1 million in restricted cash at October 31, 2023 and 2022, respectively. In connection with the New Credit Facility, we temporarily posted cash collateral to satisfy certain collateral requirements as we transitioned banks providing letters of credit related to our workers compensation policies. As of October 31, 2023, we recorded $ million and $ million as restricted cash and prepaid and other current assets, respectively, related to this transition. In the prior year, we had restricted cash in our subsidiary Calavo de Mexico. This cash was restricted due to the 2013 tax assessment. In November 2022, this restriction was lifted. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of non-trade receivables, infrastructure advances and prepaid expenses. Non-trade receivables were $6.8 million and $4.8 million at October 31, 2023 and 2022, respectively. Included in non-trade receivables are $2.7 million and $1.8 million related to the current portion of non-CDM Mexican IVA (i.e. value-added) taxes at October 31, 2023 and 2022 (See Note 14). Infrastructure advances are discussed below. Prepaid expenses totaling Accounts Receivable Trade accounts receivable are reported at amounts due from customers, net of an allowance for doubtful accounts and customer deductions accounted for as variable consideration. The Company performs credit evaluations of customers and evaluates the need for allowances for potential credit losses based on historical experience, as well as current and expected general economic conditions. The total allowance for estimated uncollectable accounts receivable balances and customer deductions were $5.2 million and $4.2 million as of October 31, 2023 and 2022, respectively. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is computed on a monthly weighted-average basis, which approximates the first-in, first-out method; market is based upon estimated replacement costs. Costs included in inventory primarily include the following: fruit, picking and hauling, overhead, labor, materials and freight. Property, Plant, and Equipment Property, plant, and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are stated at cost and amortized over the lesser of their estimated useful lives or the term of the lease, using the straight-line method. Useful lives are as follows: buildings and improvements - . Significant repairs and maintenance that increase the value or extend the useful life of our fixed asset are capitalized. Ongoing maintenance and repairs are charged to expense. Goodwill and Acquired Intangible Assets Goodwill, defined as unidentified asset(s) acquired in conjunction with a business acquisition, is tested for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We perform an assessment of goodwill for impairment on an annual basis, and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To the extent the carrying amount of the reporting unit’s allocated goodwill exceeds the unit’s fair value, we recognize an impairment of goodwill for the excess up to the amount of goodwill of that reporting unit. In fiscal 2023 and 2022, the Company’s estimated fair value significantly exceeded its carrying value. The fair value of the Company’s reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow analysis, a market approach is utilized using observable market data such as comparable companies in similar lines of business that are publicly traded. The Company concluded based on its quantitative assessment that no goodwill impairment existed in the fiscal years ended October 31, 2023 and 2022. Goodwill impairment testing requires significant judgment and management estimates, including, but not limited to, the determination of (i) the number of reporting units, (ii) the goodwill and other assets and liabilities to be allocated to the reporting units and (iii) the fair values of the reporting units which includes forecasted cash flow. The estimates and assumptions described above, along with other factors such as discount rates, will significantly affect the outcome of the impairment tests and the amounts of any resulting impairment losses. Long-lived Assets Long-lived assets, including fixed assets and intangible assets (other than goodwill), are continually monitored and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The determination of recoverability is based on an estimate of undiscounted cash flows expected to result from the use of an asset and its eventual disposition. The estimate of undiscounted cash flows is based upon, among other things, certain assumptions about future operating performance, growth rates and other factors. Estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to the business model or changes in operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, an impairment loss will be recognized, measured as the amount by which the carrying value exceeds the fair value of the asset. For fiscal years 2023 and 2022, we performed our annual assessment of long-lived assets and determined that Investments We account for non-marketable investments using the equity method of accounting if the investment gives us the ability to exercise significant influence over, but not control, an investee. Significant influence generally exists when we have an ownership interest representing between 20% and 50% of the voting stock of the investee. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions. In December 2014, Calavo formed a wholly-owned subsidiary Calavo Growers De Mexico, S. de R.L. de C.V. (Calavo Sub). In July 2015, Calavo Sub entered into a Shareholder Agreement with Grupo Belo del Pacifico, S.A. de C.V., (Belo) a Mexican company owned by Agricola Belher, and Agricola Don Memo, S.A. de C.V. (Don Memo). Don Memo, a Mexican corporation formed in July 2013, is engaged in the business of owning and improving land in Jalisco, Mexico for the growing and sale of tomatoes and other produce. Belo and Calavo Sub have an equal one-half ownership interest in Don Memo. Pursuant to a management service agreement, Belo, through its officers and employees, shall have day-to-day power and authority to manage the operations. This investment contribution represent Calavo Sub’s ownership in Don Memo, which is included in investment in unconsolidated entities on our balance sheet. We use the equity method to account for this investment. As of October 31, 2023 and 2022, we have an investment of Advances to Suppliers We advance funds to third-party growers primarily in Mexico for various farming needs. Typically, we obtain collateral (i.e. fruit, fixed assets, etc.) that approximates the value at risk, prior to making such advances. We continuously evaluate the ability of these growers to repay advances in order to evaluate the possible need to record an allowance. No such allowance was required at October 31, 2023 and 2022. Pursuant to our distribution agreement with Agricola Belher (Belher) of Mexico, a producer of fresh vegetables, primarily tomatoes, for export to the U.S. market, Belher agreed, at their sole cost and expense, to harvest, pack, export, ship, and deliver tomatoes exclusively to our Company, primarily our Arizona facility. In exchange, we agreed to sell and distribute such tomatoes, make advances to Belher for operating purposes, provide additional advances as shipments are made during the season (subject to limitations, as defined), and return the proceeds from such tomato sales to Belher, net of our commission and aforementioned advances. These advances will be collected through settlements by the end of each year. As of October 31, 2023 and 2022, we have total advances of Similar to Belher, we make advances to Don Memo for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from such tomato sales to Don Memo, net of our commission and aforementioned advances. As of October 31, 2023 and 2022, we have total advances of $7.3 million and $7.0 million, respectively, to Don Memo, which is recorded in advances to suppliers, offset by tomato liabilities from the sales of tomatoes per the tomato marketing agreement. We also have a distribution agreement with tomato grower Exportadora Silvalber (Silvalber). We made Infrastructure Advances Pursuant to our infrastructure agreements, we make advances to be used solely for the acquisition, construction, and installation of improvements to and on certain land owned/controlled by Belher and Don Memo, as well as packing line equipment. In October 2020, we entered into an infrastructure loan agreement with Don Memo for $2.4 million secured by Don Memo’s property and equipment. This infrastructure loan accrues interest at . In October 2020, we advanced million related to this loan agreement. We advanced an additional million in the first, and second quarters of fiscal 2021, respectively. We have a total balance outstanding of In July 2021, we made a bridge loan of $3.5 million to Belher. This loan is secured by certain farmland in Mexico and accrues interest at million on July 31, 2024. As part of this amended loan agreement, we can withhold payments on both the infrastructure advances and the bridge loan through the netting the amount due against the grower payable due to Belher. For each the years ended October 31, 2023 and 2022, we withheld Accrued Expenses Included in accrued expenses are liabilities related to the receipt of goods and/or services for which an invoice has not yet been received. These totaled approximately $14.5 million and $28.7 million for the years ended October 31, 2023 and 2022, respectively. Leases Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The Company makes a determination if an arrangement constitutes a lease at inception, and categorizes the lease as either an operating or finance lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. For finance leases, we recognize interest expense and amortization of the right-of-use asset, and for operating leases, we recognize lease expense on a straight-line basis over the lease term. The interest expense amortization component of the finance lease liabilities is recorded within interest expense on the consolidated statements of operations. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. We estimated our incremental borrowing rate based upon a synthetic credit rating and yield curve analysis. As a result, the incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. Revenue Recognition The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of net consideration expected to be received in exchange for transferring products. Revenue from product sales is governed primarily by customer pricing and related purchase orders (“contracts”) which specify shipping terms and certain aspects of the transaction price including variable considerations such as rebates, discounts and other sales incentives. Contracts are at standalone pricing. The performance obligation in these contracts is determined by each of the individual purchase orders and the respective stated quantities, with revenue being recognized at a point in time when obligations under the terms of the agreement are satisfied. This generally occurs with the transfer of control of our products to the customer and the product is delivered. The Company's customers have an implicit and explicit right to return non-conforming products. A provision for payment discounts and product return allowances, which is estimated, is recorded as a reduction of sales in the same period that the revenue is recognized. Sales Incentives and Other Promotional Programs The Company routinely offers sales incentives and discounts through various regional and national programs to our customers and consumers. These programs include product discounts or allowances, product rebates, product returns, one-time or ongoing trade-promotion programs with customers and consumer coupon programs that require the Company to estimate the expected costs of such programs. The costs associated with these activities are accounted for as reductions to the transaction price of the Company’s products and are, therefore, recorded as reductions to gross sales at the time of sale. The Company bases its estimates of incentive costs on historical trend experience with similar programs, actual incentive terms per customer contractual obligations and expected levels of performance of trade promotions, utilizing customer and sales organization inputs. The Company maintains liabilities at the end of each period for the estimated incentive costs incurred but unpaid for these programs. Differences between estimated and actual incentive costs are generally not material and are recognized in earnings in the period such differences are determined. Reserves for product returns, accrued rebates and promotional accruals are included in the consolidated balance sheets as part of accounts receivable. Principal vs. Agent Considerations We frequently enter into consignment arrangements with avocado and tomato growers and packers located outside of the U.S. and growers of certain perishable products in the U.S. We evaluate whether the performance obligation is a promise to transfer services to the customer (as the principal) or to arrange for services to be provided by another party (as the agent) using a control model. This evaluation determined that the Company is in control of establishing the transaction price, managing all aspects of the shipments process and taking the risk of loss for delivery, collection, and returns. Based on the Company’s evaluation of the control model, it determined that all of the Company’s major businesses act as the principal rather than the agent within their revenue arrangements and such revenues are reported on a gross basis. Customers We sell to retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesale customers. Our top ten customers accounted for approximately of our consolidated net sales in fiscal years 2023, 2022 and 2021, respectively. Sales to our largest customer, Kroger (including its affiliates), represented approximately of net sales in fiscal years 2023, 2022 and 2021, respectively. No other single customer accounted for more than 10% of our net sales in any of the last three fiscal years. Shipping and Handling We include shipping and handling fees billed to customers in net sales. Amounts incurred by us for freight are included in cost of goods sold. Promotional Allowances We provide for promotional allowances at the time of sale, based on our historical experience. Our estimates are generally based on evaluating the historical relationship between promotional allowances and gross sales. The derived percentage is then applied to the current period’s sales revenues in order to arrive at the appropriate debit to sales allowances for the period. The offsetting credit is made to an allowance on accounts receivable. When certain amounts of specific customer accounts are subsequently identified as promotional, they are written off against this allowance. Actual amounts may differ from these estimates and such differences are recognized as an adjustment to net sales in the period they are identified. Consignment Arrangements We frequently enter into consignment arrangements with avocado and tomato growers and packers located outside of the U.S. and growers of certain perishable products in the U.S. Although we generally do not take legal title to these avocados and perishable products, we do assume responsibilities (principally assuming credit risk, inventory loss and delivery risk, and pricing risk) that are consistent with acting as a principal in the transaction. Accordingly, the accompanying financial statements include sales and cost of sales from the sale of avocados and perishable products procured under consignment arrangements. 2023 2022 2021 Sales $ 56,811 $ 59,748 $ 52,287 Cost of Sales 51,937 53,238 45,945 Gross Profit $ 4,874 $ 6,510 $ 6,342 Advertising Expense Advertising costs are expensed when incurred and are generally included as a component of selling, general and administrative expense. Such costs were approximately $0.4 million, $0.6 million and $0.4 million for fiscal years 2023, 2022, and 2021, respectively. Research and Development Research and development costs are expensed as incurred and are generally included as a component of selling, general and administrative expense. Total research and development costs for fiscal year 2023, 2022 and 2021 was approximately $0.1 million, $0.1 million and $0.3 million, respectively. Restructuring Costs For the year ended October 31, 2022, we recorded $2.8 million of consulting expenses (included in selling, general and administrative expenses) related to an enterprise-wide strategic business review conducted for the purpose of restructuring to improve the profitability of the organization and efficiency of our operations. We also recorded $5.5 million and $2.0 million for the years ended October 31, 2023 and 2022, respectively, of management recruiting and severance costs related to this restructuring initiative. Other Income Included in other income is dividend income totaling $0 million, $0.8 million, and $0.6 million for fiscal years 2023, 2022 and 2021, respectively. See Note 8 for related party disclosure related to other income. Income Taxes We account for deferred tax liabilities and assets for the future consequences of events that have been recognized in our consolidated financial statements or tax returns. Measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and tax bases of our assets and liabilities result in a deferred tax asset, we perform an evaluation of the probability of being able to realize the future benefits indicated by such asset. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or all of the deferred tax asset will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As a multinational corporation, we are subject to taxation in many jurisdictions, and the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. If we ultimately determine that the payment of these liabilities will be unnecessary, the liability will be reversed and we will recognize a tax benefit during the period in which it is determined the liability no longer applies. Conversely, we record additional tax charges in a period in which it is determined that a recorded tax liability is less than the ultimate assessment is expected to be. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Basic and Diluted Net Loss per Share Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock options and contingent consideration. Diluted earnings per common share is calculated using the weighted-average number of common shares outstanding during the period after consideration of the dilutive effect of stock options and the effect of contingent consideration shares. Basic and diluted net loss per share is calculated as follows (U.S. dollars in thousands, except per share data): Year ended October 31, 2023 2022 2021 Numerator: Net loss attributable to Calavo Growers, Inc. $ (8,344) $ (6,249) $ (11,818) Denominator: Weighted average shares - Basic 17,750 17,663 17,621 Effect on dilutive securities – Restricted stock/units/options (1) — — — Weighted average shares - Diluted 17,750 17,663 17,621 Net loss per share attributable to Calavo Growers, Inc: Basic $ (0.47) $ (0.35) $ (0.67) Diluted $ (0.47) $ (0.35) $ (0.67) (1) For the year ended October 31, 2023, 2022 and 2021, approximately 104,000 shares, 82,000 shares, and 42,000 shares of common stock equivalents were excluded in the computation of diluted net loss per share, respectively, as the effect would be anti-dilutive since the Company reported a net loss. Stock-Based Compensation We account for awards of equity instruments issued to employees under the fair value method of accounting and recognize such amounts in our statements of operations. We measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest. For the years ended October 31, 2023, 2022 and 2021, we recognized compensation expense of $5.2 million, $3.1 million, and $4.0 million related to stock-based compensation, respectively (See Note 12). For our restricted stock awards, the value of the stock-based compensation was determined from quoted market prices at the date of the grant. For our stock option awards, w Foreign Currency Translation and Remeasurement Our foreign operations are subject to exchange rate fluctuations and foreign currency transaction costs. The functional currency of our foreign subsidiaries is the United States (U.S.) dollar. As a result, monetary assets and liabilities are translated into U.S. dollars at exchange rates as of the balance sheet date and non-monetary assets, liabilities and equity are translated at historical rates. Sales and expenses are translated using a weighted-average exchange rate for the period. Gains and losses resulting from those remeasurements are included in income. Gains and losses resulting from foreign currency transactions are also recognized in income. Total foreign currency translation gains for fiscal 2023 and 2021, net of losses, was Fair Value of Financial Instruments We believe that the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings approximates fair value based on either their short-term nature or on terms currently available to the Company in financial markets. Due to current market rates, we believe that our fixed-rate long-term obligations and finance leases have nearly the same fair value and carrying value of approximately Derivative Financial Instruments We were not a party to any material derivative instruments during the fiscal year. It is currently our intent not to use derivative instruments for speculative or trading purposes. Additionally, we do not use any hedging or forward contracts to offset market volatility. Noncontrolling Interest The following tables reconcile shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands). Year ended Year ended Avocados de Jalisco noncontrolling interest October 31, 2023 October 31, 2022 Noncontrolling interest, beginning $ 1,015 $ 1,368 Net income (loss) attributable to noncontrolling interest of Avocados de Jalisco 377 (353) Noncontrolling interest, ending $ 1,392 $ 1,015 |
Inventories
Inventories | 12 Months Ended |
Oct. 31, 2023 | |
Inventories | |
Inventories | 3. Inventories Inventories consist of the following (in thousands): October 31, October 31, 2023 2022 Fresh fruit $ 19,870 $ 16,938 Packing supplies and ingredients 9,438 14,176 Finished prepared foods 10,122 7,716 Total $ 39,430 $ 38,830 We assess the recoverability of inventories through an ongoing review of inventory levels in relation to sales and forecasts and product marketing plans. When the inventory on hand, at the time of the review, exceeds the foreseeable demand, the value of inventory that is not expected to be sold is written down. The amount of the write-down is the excess of historical cost over estimated realizable value. Once established, these write-downs are considered permanent adjustments to the cost basis of the excess inventory. The assessment of the recoverability of inventories and the amounts of any write-downs are based on currently available information and assumptions about future demand and market conditions. Demand for processed avocado products may fluctuate significantly over time, and actual demand and market conditions may be more or less favorable than our projections. In the event that actual demand is lower than originally projected, additional inventory write-downs may be required. |
Property, Plant, and Equipment
Property, Plant, and Equipment | 12 Months Ended |
Oct. 31, 2023 | |
Property, Plant, and Equipment | |
Property, Plant, and Equipment | 4. Property, Plant, and Equipment Property, plant, and equipment consist of the following (in thousands): October 31, 2023 2022 Land $ 11,008 $ 11,008 Buildings and improvements 46,627 45,733 Leasehold improvements 21,524 19,030 Equipment 127,876 121,441 Information systems - hardware and software 14,767 11,920 Construction in progress 6,846 8,307 228,648 217,439 Less accumulated depreciation and amortization (115,919) (104,129) $ 112,729 $ 113,310 Depreciation expense was $13.8 million, $15.0 million and $14.5 million for fiscal years 2023, 2022, and 2021, respectively. Included in property, plant, and equipment are finance leases. Amortization of finance leases was |
Other assets and Intangibles
Other assets and Intangibles | 12 Months Ended |
Oct. 31, 2023 | |
Other assets and Intangibles | |
Other assets and Intangibles | 5. Other Assets and Intangibles Other assets consist of the following (in thousands): October 31, October 31, 2023 2022 Mexican IVA (i.e. value-added) taxes receivable, net (see Note 14) $ 49,888 $ 43,625 Infrastructure advances (see Note 2) 1,641 1,241 Bridge loan to Agricola Belher (see Note 2) — 1,700 Other 930 604 Total $ 52,459 $ 47,170 The intangible assets consist of the following (in thousands): October 31, 2023 October 31, 2022 Weighted- Gross Net Gross Net Average Carrying Accum. Book Carrying Accum. Book Useful Life Value Amortization Value Value Amortization Value Customer list/relationships 8 years $ 17,100 $ (12,517) $ 4,583 $ 17,340 $ (11,373) $ 5,967 Trade names 8 years 3,949 (3,109) 840 4,060 (3,100) 960 Trade secrets/recipes 9 years 170 (170) — 630 (626) 4 Brand name intangibles indefinite 275 — 275 275 — 275 Intangibles, net $ 21,494 $ (15,796) $ 5,698 $ 22,305 $ (15,099) $ 7,206 We recorded amortization expense of approximately $1.5 million, $1.6 million, and $1.6 million for fiscal years 2023, 2022, and 2021, respectively. We anticipate recording amortization expense of approximately |
Revolving Credit Facilities
Revolving Credit Facilities | 12 Months Ended |
Oct. 31, 2023 | |
Revolving Credit Facilities | |
Revolving Credit Facilities | 6. Revolving Credit Facilities On June 26, 2023, Calavo and certain subsidiaries entered into a credit agreement (the “Credit Agreement”) by and among Calavo, certain subsidiaries of Calavo as guarantors, and Wells Fargo Bank, National Association, as agent and lender (“Agent”). The Credit Agreement provides for a revolving credit facility of up to The initial proceeds of $36.8 million on the Revolving Loans were used to fully repay the outstanding $34.9 million, balance under Calavo’s previous revolving credit facility with Bank of America, N.A. and to pay related transaction fees and expenses, and following the Closing Date (June 26, 2023) may be used for working capital and other general corporate purposes. For a period of one year following the Closing Date, Calavo may utilize the proceeds of the Term Loan to pay a certain percentage of the costs of certain equipment purchased by Calavo. Borrowings of the Revolving Loans under the Credit Agreement are asset-based and are subject to a borrowing base calculation that includes a certain percentage of eligible accounts receivable, inventory and equipment of Calavo, less any reserves implemented by Agent in its permitted discretion; provided that the equipment based portion of such borrowing base calculation will reduce monthly following the Closing Date. Borrowings under the Credit Agreement bear interest at a rate per annum equal to an applicable margin, plus, at Calavo’s option, either a base rate or a secured overnight financing rate (“SOFR”) term rate (which includes a spread adjustment of Calavo may voluntarily prepay loans under the New Credit Facility, in whole or in part, without premium or penalty. Subject to the terms and conditions set forth in the Credit Agreement, Calavo may be required to make certain mandatory prepayments prior to the Maturity Date. The Credit Agreement contains negative covenants that, among other things, limit Calavo’s ability to: incur indebtedness; grant liens on its assets; enter into certain investments; consummate fundamental change transactions; engage in mergers or acquisitions or dispose of assets; enter into certain transactions with affiliates; make changes to its fiscal year; enter into certain restrictive agreements; and make certain restricted payments (including for dividends). Each of these limitations are subject to various conditions. The Credit Agreement also contains a springing fixed charge coverage ratio financial covenant that is tested if the amount of the Revolving Loans available for Calavo to borrow under the New Credit Facility is less than The Credit Agreement also contains certain affirmative covenants and customary events of default provisions, including, subject to thresholds and grace periods, among others, payment default, covenant default, cross default to other material indebtedness, and judgment default. As of October 31, 2023, we were in compliance with the financial covenants, and we expect to remain in compliance for the next 12-months from our issuance date. As of October 31, 2023, approximately $40.0 million was available for borrowing, based on our borrowing base calculation discussed above. The weighted-average interest rate under the Credit Facility was 7.1% at October 31, 2023. Under the New Credit Facility, we had $35.0 million and $4.1 million outstanding related to the Revolving Loans and Term Loan, respectively, as of October 31, 2023. The future principal payments related to the Term Loan is approximately $0.6 million for fiscal year 2024, $0.7 million for fiscal year 2025, $0.7 million for fiscal year 2026, $0.7 million for fiscal year 2027, and $1.4 million for fiscal year 2028. In connection with the New Credit Facility, we temporarily posted cash collateral to satisfy certain collateral requirements as we transitioned banks providing letters of credit related to our workers compensation policies. As of October 31, 2023, we have recorded $0.8 million and $3.0 million as restricted cash and prepaid and other current assets, respectively, related to this transition. The weighted-average interest rate under our previous credit facility with Bank of America was at October 31, 2022. Under this credit facility, we had |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Oct. 31, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 7. Commitments and Contingencies Commitments and guarantees We lease facilities and certain equipment under non-cancelable leases expiring at various dates through 2031. We are committed to make minimum cash payments under these agreements as of October 31, 2022. See Note 15 for additional details on the type of lease agreements. We indemnify our directors and have the power to indemnify each of our officers, employees and other agents, to the maximum extent permitted by applicable law . No amounts have been accrued in the accompanying financial statements related to these indemnifications. Compliance matters On January 16, 2024, the Company announced that its internal audit process had identified to the Audit Committee of the Board of Directors certain matters that the Board of Directors determined after fiscal year end merited enhanced evaluation. A Special Committee of the Board of Directors (the “Special Committee”) was established to commence an investigation, with the assistance of external legal counsel and external forensic accountants. The Special Committee determined that certain of those matters related to the Company’s operations in Mexico raised potential issues under the Foreign Corrupt Practices Act (“FCPA”). The Company has voluntarily disclosed this ongoing internal investigation to the SEC and the Department of Justice ("DOJ"), and the Company intends to fully cooperate with the SEC and the DOJ in connection with these matters. Any determination that the Company’s operations or activities were not in compliance with laws, including the FCPA, could result in the imposition of material fines and penalties and the imposition of equitable remedies. The Company cannot currently predict the timing of completion or the outcome of its internal investigation or of any actions that may be taken by the SEC, the DOJ or Mexican authorities in connection with the matters under investigation, and the Company cannot currently estimate the amount or range of loss or potential impact on its consolidated financial statements associated with these matters. Mexico tax audits We conduct business both domestically and internationally and, as a result, one or more of our subsidiaries files income tax returns in U.S. federal, U.S. state and certain foreign jurisdictions. Accordingly, in the normal course of business, we are subject to examination by taxing authorities, primarily in Mexico and the United States. 2013 Assessment In January 2017, we received preliminary observations from the Servicio de Administracion Tributaria in Mexico (the “SAT”) related to an audit for fiscal year 2013 outlining certain proposed adjustments primarily related to intercompany funding, deductions for services from certain vendors/suppliers and IVA. We provided a written rebuttal to these preliminary observations during our second fiscal quarter of 2017. During the period from our third fiscal quarter of 2017 through our third fiscal quarter of 2018, we attempted to resolve our case with the SAT through the conclusive agreement submitted before PRODECON (Mexican Tax Ombudsman), having several working meetings attended by representatives of the SAT, Calavo de Mexico (“CDM”) and the PRODECON. However, we were unable to materially resolve our case with the SAT through the PRODECON process. As a result, in July 2018, the SAT’s local office in Uruapan issued to CDM a final tax assessment (the “2013 Assessment”) totaling approximately $2.6 billion Mexican pesos (which includes annual adjustments for inflation, and equals approximately $143.8 million USD at October 31, 2023) related to income tax, flat rate business tax, and value added tax, related to this fiscal 2013 tax audit. This amount has been adjusted for inflation as of October 31, 2023 to the amount of $3 billion Mexican pesos (approximately $166.0 million USD). Additionally, the tax authorities have determined that we owe our employees profit-sharing liability, totaling approximately $118 million Mexican pesos (approximately $6.5 million USD at October 31, 2023). In August 2018, we filed an Administrative Appeal on the 2013 Assessment, appealing our case to the SAT’s central legal department in Michoacan. On June 25, 2021, we became aware that the Administrative Appeal had been resolved by the SAT against CDM on March 12, 2021, and that we had allegedly failed to timely respond to and challenge the SAT’s notification of such resolution, therefore rendering the 2013 Assessment as definitive. Consequently, the SAT placed liens on the fixed assets of CDM, with a net book value of approximately $26 million USD, and on bank accounts of CDM totaling approximately $1 million USD in order to guaranty the 2013 Assessment. Based on legal counsel from our tax advisory firm, we and our tax advisory firm have concluded that the March notification was not legally communicated. On August 18, 2021, we filed an Administrative Reconsideration (the Reconsideration) before the Central Legal Department of the SAT located in Mexico City, asserting that the resolution in March of the Administrative Appeal was wrongly concluded, in particular with respect to the following matters: o Failure to recognize CDM as a “maquiladora” o Considering the Company to have a permanent establishment in Mexico, o Including fruit purchase deposits transferred by the Company to CDM as taxable, o Application of 16% IVA tax to fruit purchase deposits; and o Imposing double-taxation on the fruit purchase transactions On August 20, 2021 we filed an Annulment Suit (the Annulment Suit) with the Federal Tax Court, which among other things, strongly contends that the notifications made by the SAT to CDM and its designated advisors of the resolution of the Administrative Appeal in March 2021 were not legally communicated. In addition, the Annulment Suit asserts the same matters central to the Reconsideration, as described above, as wrongly concluded in the resolution of the Administrative Appeal. On September 22, 2021, we had an initial in-person meeting with the SAT in Mexico City to formally present and discuss the Reconsideration. The SAT agreed to review our Reconsideration in more detail; however, on January 3, 2022, the SAT formally rejected our request for the Reconsideration. In response to this rejection, on January 21, 2022, we filed a capital suit (the “Injunction Suit”) with a federal district court seeking to nullify the arguments against the Reconsideration made by the SAT on constitutional grounds. The injunction Suit was to challenge the SAT’s response issued to the Reconsideration, and with that, to keep the Reconsideration alive until the Injunction Suit is decided. This would allow time to continue the discussions with SAT at the administrative level and would give SAT the legal basis to issue a new resolution. The Injunction Suit represents a further opportunity for a court to analyze this matter from a constitutional perspective. On August 16, 2023, we received notice that the federal district court rejected the Injunction Suite. In so doing, the federal district court did not rule on the substance of the case, stating that the substance of the cse will be resolved by the Tax Court through the Annulment Suit. The Company filed an appeal with the federal circuit court on August 30, 2023. On March 10, 2022, we met with the SAT and offered an Administrative Guaranty ( Embargo en Via Administrativa) , On October 10, 2022, the Tax Court ruled in favor of CDM granting the definitive suspension, accepting the Administrative Guaranty and forcing the SAT to remove all liens placed on CDM fixed assets and bank accounts. These liens were removed in November 2022. The Court also recognized that the On October 13, 2023, the company filed an extension of the Annulment Suit filed on August 20, 2021, as a result of the response to the lawsuit filed by the Tax Authority, pointing out that Tax Authority’s resolution is unlawful due to improper substantiation and motivation, because of the following: • The QR Code does not allow the company to verify the veracity of the document, • The notification of the tax assessment was not sent to the phone number indicated by the company, when the Tax Authority was obliged to do so, among others. On November 14, 2023, the Tax Court notified the admission of the extension of the lawsuit was filed. While we continue to believe that the 2013 Assessment is completely without merit, and that we will prevail on the Annulment Suit in the Tax Court, we also believe that it is in the best interest of CDM and the Company to settle the 2013 Assessment as quickly as possible. Furthermore, we believe that the above actions taken by CDM will encourage the SAT to agree to reach a settlement. In accordance with our cumulative probability analysis on uncertain tax positions, our settlements made by the SAT in other cases, the 2011 Assessment settlement reached by CDM with the MFM, and the value of CDM assets, we recorded a provision of $11 million in the third quarter of fiscal 2021, as a discrete item in Income Tax Provision. The provision includes estimated penalties, interest and inflationary adjustments. We believe that this provision remains appropriate as of October 31, 2023 based on our cumulative probability analysis. We incurred Litigation From time to time, we are also involved in litigation arising in the ordinary course of our business that we do not believe will have a material adverse impact on our financial statements. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Oct. 31, 2023 | |
Related-Party Transactions | |
Related-Party Transactions | 8. Related-Party Transactions Board of Directors and Chief Executive Officer Certain members of our Board of Directors market California avocados through Calavo pursuant to marketing agreements substantially similar to the marketing agreements that we enter with other growers. During the years ended October 31, 2023, 2022, and 2021, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was million, respectively. We did Agricola Don Memo, S.A. de C.V. (“Don Memo”) In December 2014, Calavo formed a wholly-owned subsidiary, Calavo Growers De Mexico, S. de R.L. de C.V. (Calavo Sub). In July 2015, Calavo Sub entered into a Shareholder Agreement with Belo, a Mexican company owned by Agricola Belher, and formed Agricola Don Memo, S.A. de C.V. Belo and Calavo Sub have an equal one-half million each. Pursuant to a management service agreement, Belo, through its officers and employees, has day-to-day power and authority to manage the operations. Therefore, Don Memo is accounted for on the equity method as an unconsolidated entity. Belo is entitled to a management fee payable annually in July of each year. Additionally, Calavo Sub is entitled to commission for the sale of produce in Mexico, the U.S., Canada, and any other overseas market. As of October 31, 2023, 2022 and 2021, we have an investment of $2.9 million, $3.8 million and $4.3 million, respectively, representing Calavo Sub’s 50% ownership in Don Memo, which is included as an investment in unconsolidated entities on our balance sheet. We make advances to Don Memo for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from tomato sales under our marketing program to Don Memo, net of our commission and aforementioned advances. For the year ended October 31, 2022, we advanced an additional $2.8 million of preseason advances to Don Memo. As of October 31, 2023, 2022 and 2021, we had outstanding advances of In October 2020, we entered into an infrastructure loan agreement with Don Memo for up to $2.4 million secured by certain property and equipment of Don Memo. This infrastructure loan accrues interest at . The total outstanding balance related to this infrastructure loan agreement at October 31, 2023 was million (included in other assets). The total outstanding balance related to this infrastructure loan agreement at October 31, 2022 was Belher We make advances to Belher for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from tomato sales under our marketing program to Belher, net of our commission and aforementioned advances. We had grower advances due from Belher of $5.4 million, $4.5 million and $4.5 million as of October 31, 2023, 2022 and 2021, respectively. In August 2018, we entered into an amended infrastructure agreement with Belher and advanced $3.0 million. This amount was to be paid back annually at $0.6 million through June 2023, and accrue interest of LIBOR plus 10% . In August 2020, we amended this agreement to lower the interest rate to million per year). This infrastructure advance was paid in full during fiscal 2022, through the netting against the grower payable to Belher (see below). In July 2021, we made a bridge loan of $3.5 million to Belher. This loan is secured by certain farmland in Mexico and accrues interest at million on July 31, 2022, $0.9 million on July 31, 2023 and $1.7 million on July 31, 2024. As part of this amended loan agreement, we can withhold payments on both the infrastructure advances and the bridge loan through the netting against the grower payable due to Belher. For the years ended October 31, 2023 and 2022, we withheld million, respectively, from payments to Belher to offset the bridge loan repayments. As of October 31, 2023, the balance of the bridge loan has been recorded as Avocados de Jalisco, S.A.P.I. de C.V. (“Avocados de Jalisco”) In August 2015, we entered into a Shareholder’s Agreement with various partners to form Avocados de Jalisco, which is a Mexican corporation engaged in procuring, packing, and selling avocados. This entity is approximately owned by Calavo and is consolidated in our financial statements. Avocados de Jalisco built a packinghouse located in Jalisco, Mexico and such packinghouse began operations in June of 2017. As of October 31, 2023 and 2022, we have made an insignificant amount of preseason advances to various partners of Avocados de Jalisco. During the year ended October 31, 2023, 2022 and 2021, we purchased approximately million, respectively, of avocados from the partners of Avocados de Jalisco. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 31, 2023 | |
Income Taxes | |
Income Taxes | 9. Income Taxes The income tax provision consists of the following for the years ended October 31, (in thousands): 2023 2022 2021 Current: Federal $ (387) $ 2,012 $ (3,449) State 280 147 323 Foreign 1,143 1,209 16,703 Total current 1,036 3,368 13,577 Deferred: Federal (468) (162) 790 State (337) 746 (343) Foreign 2,656 (701) (3,934) Total deferred 1,851 (117) (3,487) Change in valuation allowance 3,055 — 657 Total income tax provision $ 5,942 $ 3,251 $ 10,747 2023 2022 2021 Domestic $ (8,741) $ (1,411) $ (4,959) Foreign 6,716 (1,940) 3,784 Income (loss) before taxes $ (2,025) $ (3,351) $ (1,175) The above loss before taxes includes the net loss from unconsolidated entites of At October 31, 2023 and 2022, gross deferred tax assets totaled approximately $25.8 million and $23.5 million, while gross deferred tax liabilities totaled approximately $18.7 million and $16.2 million, respectively. Deferred income taxes reflect the net of temporary differences between the carrying amount of assets and liabilities for financial reporting and income tax purposes. Significant components of our deferred tax assets (liabilities) as of October 31, are as follows (in thousands): 2023 2022 Intangible assets $ 941 $ 2,828 Stock-based compensation 316 715 State taxes 7 6 Allowance for accounts receivable 1,276 936 Inventories 591 442 Accrued liabilities 2,238 1,143 Operating lease liabilities 14,444 14,861 Net operating loss 4,109 549 Capital loss carryover 806 804 Credits and incentives 1,099 1,194 Total deferred income tax assets 25,827 23,478 Property, plant, and equipment (6,340) (2,002) Operating lease - right of use assets (12,111) (13,723) Other (227) (490) Total deferred income tax liabilities (18,678) (16,215) Valuation allowance (4,885) (1,830) Net deferred income tax assets $ 2,264 $ 5,433 The Company’s net deferred income tax assets as presented in the consolidated balance sheets consists of the following items as of October 31, (in thousands): Year Ended October 31, 2023 2022 Deferred income tax assets $ 3,010 $ 5,433 Deferred income tax liabilities (746) — Net deferred income tax assets $ 2,264 $ 5,433 As of October 31, 2023, the Company had a federal net operating loss carryforward of $6.6 million. As of October 31, 2023 and 2022, the Company has gross state net operating loss carryforwards of approximately $13.4 million and $9.1 million, respectively, with carryforward periods primarily ranging from 20 years to indefinite. The Company’s domestic operations has incurred a cumulative operating loss for the last three years. During the fourth quarter of the year ended October 31, 2023, based on this evaluation, and after considering future reversals of existing taxable temporary differences, the Company determined the realization of a majority of the net deferred tax assets no longer met the more likely than not criteria and a valuation allowance was recorded against the majority of the net deferred tax assets. As of October 31, 2023 and 2022, there is a valuation allowance of A reconciliation of the significant differences between the federal statutory income tax rate and the effective income tax rate on pretax income (loss) for the years ended October 31, is as follows: 2023 2022 2021 Federal statutory tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal effects 0.9 (1.3) 11.6 Rate differential on NOL carryback — — 125.8 Foreign tax rate differential (29.8) 5.2 16.1 Uncertain tax positions — 5.1 (1,059.9) Stock based compensation (26.3) (6.1) (16.7) Provision to return (12.3) (59.9) 39.2 US tax on foreign income, net (15.8) — — State rate change 0.9 (2.5) 9.2 Valuation allowance (150.7) (24.2) (44.1) Limits on executive compensation (21.6) — — Other permanent differences (19.1) (33.8) — Other (40.6) (0.5) (15.5) (293.4) % (97.0) % (913.3) % As of October 31, 2023, and 2022, we had $11.1 million for unrecognized tax benefits related primarily to the probable outcomes of the 2013 Mexico Assessment. See Note 7 for further information. A reconciliation of the beginning and ending amount of gross unrecognized taxes (exclusive of interest and penalties) was as follows (in thousands): Year Ended October 31, 2023 2022 Beginning balance $ 11,131 $ 11,303 Reductions based on tax positions related to prior periods — (172) Gross increase - Tax positions in prior periods — — Gross increase - Tax positions in current period — — Ending balance $ 11,131 $ 11,131 Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next twelve months due to tax examination changes, settlement activities, expirations of statutes of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, the Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months. The Company accounts for income taxes regarding uncertain tax positions and recognized interest and penalties related to uncertain tax positions in income tax benefit/(expense) in the consolidated statements of operations. Total accrued interest and penalties recorded on the consolidated balance sheet were zero because the company prepaid the disputed amount. See Note 7 for additional details. We are subject to U.S. federal income tax as well as income of multiple state tax and foreign tax jurisdictions. We are no longer subject to U.S. income tax examinations for the fiscal years prior to October 31, 2020, and are no longer subject to state income tax examinations for fiscal years prior to October 31, 2019. The Company determined that certain foreign earnings to be indefinitely reinvested outside the United States. Our intent is to permanently reinvest these funds outside of the United States and our current plans do not demonstrate a need to repatriate the cash to fund our U.S. operations. However, if these funds were repatriated, we would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable to foreign tax authorities. |
Segment Information
Segment Information | 12 Months Ended |
Oct. 31, 2023 | |
Segment Information | |
Segment Information | 10. Segment Information Calavo operates in two segments, Grown and Prepared. The Grown segment consists of fresh avocados, tomatoes and papayas. The Prepared segment comprises all other products including fresh-cut fruits and vegetables, ready-to-eat sandwiches, wraps, salads and snacks, and guacamole sold at retail and food service as well as avocado pulp sold to foodservice. These business segments are presented based on how information is used by our Chief Executive Officer (our Chief Operating Decision Maker) to measure performance and allocate resources. Selling, general and administrative expenses, as well as other non-operating income/expense items, are evaluated by our Chief Executive Officer in the aggregate. We do not allocate assets, or specifically identify them, to our operating segments. Prior year information has been recast to conform with the new segment disclosures. The following table sets forth sales, cost of sales, and gross profit by segment (in thousands) Intersegment Grown Prepared Elimins. Total (All amounts are presented in thousands) Year ended October 31, 2023 Net sales $ 529,025 $ 444,552 $ (1,629) $ 971,948 Cost of sales 476,862 426,759 (1,629) 901,992 Gross profit $ 52,163 $ 17,793 $ — $ 69,956 Year ended October 31, 2022 Net sales $ 700,270 $ 492,868 $ (2,065) $ 1,191,073 Cost of sales 650,105 469,188 (2,065) 1,117,228 Gross profit $ 50,165 $ 23,680 $ — $ 73,845 For fiscal year 2023, 2022 and 2021, intersegment sales and cost of sales of $1.6 million, $2.1 million and $2.5 million, respectively, between Grown and Prepared were eliminated. The following table sets forth sales by product category, by segment (in thousands): Year ended October 31, 2023 Year ended October 31, 2022 Grown Prepared Total Grown Prepared Total Avocados $ 466,385 $ — $ 466,385 $ 645,944 $ — $ 645,944 Tomatoes 56,298 — 56,298 47,288 — 47,288 Papayas 10,432 — 10,432 11,422 — 11,422 Other fresh income 100 — 100 123 — 123 Fresh-cut products — 383,028 383,028 — 426,161 426,161 Guacamole — 70,611 70,611 — 74,970 74,970 Salsa — 796 796 — 1,860 1,860 Total gross sales 533,215 454,435 987,650 704,777 502,991 1,207,768 Less sales allowances (4,190) (9,883) (14,073) (4,507) (10,123) (14,630) Less intersegment eliminations (1,629) — (1,629) (2,065) — (2,065) Net sales $ 527,396 $ 444,552 $ 971,948 $ 698,205 $ 492,868 $ 1,191,073 Year ended October 31, 2022 Year ended October 31, 2021 Grown Prepared Total Grown Prepared Total Avocados $ 645,944 $ — $ 645,944 $ 536,969 $ — $ 536,969 Tomatoes 47,288 — 47,288 43,658 — 43,658 Papayas 11,422 — 11,422 10,884 — 10,884 Other fresh income 123 — 123 693 — 693 Fresh-cut products — 426,161 426,161 — 403,017 403,017 Guacamole — 74,970 74,970 — 75,681 75,681 Salsa — 1,860 1,860 — 2,784 2,784 Total gross sales 704,777 502,991 1,207,768 592,204 481,482 1,073,686 Less sales allowances (4,507) (10,123) (14,630) (3,677) (11,682) (15,359) Less intersegment eliminations (2,065) — (2,065) (2,497) — (2,497) Net sales $ 698,205 $ 492,868 $ 1,191,073 $ 586,030 $ 469,800 $ 1,055,830 Sales to customers outside the U.S. were approximately $34.6 million, $27.8 million and $34.8 million for fiscal years 2023, 2022, and 2021, respectively. Prepared segment sales included sales to two customers who represented more than 10% of total consolidated revenues for fiscal 2023. Prepared segment sales included sales to one customer who represented more than 10% of total consolidated revenues for fiscal 2022 and 2021. Additionally, the Grown products segment had sales to one customer that represented more than 10% of total consolidated revenues for fiscal 2021. Our goodwill balance of $28.7 million is attributed by segment to Grown for $4.0 million and Prepared for $24.7 million as of October 31, 2023 and 2022, respectively. Long-lived assets attributed to geographic areas as of October 31, are as follows (in thousands): United States Mexico Consolidated October 31, 2023 $ 77,791 $ 34,938 $ 112,729 October 31, 2022 $ 77,208 $ 36,102 $ 113,310 |
Long-Term Obligations
Long-Term Obligations | 12 Months Ended |
Oct. 31, 2023 | |
Long-Term Obligations | |
Long-Term Obligations | 11. Long-Term Obligations Long-term obligations at fiscal year ends consist of the following (in thousands): 2023 2022 Finance leases 7,251 6,021 Less current portion (1,604) (1,574) $ 5,647 $ 4,447 See Note 15 for additional information. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Oct. 31, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 12. Stock-Based Compensation The 2020 Equity Incentive Plan In April 2021, our shareholders approved the Calavo Growers, Inc. 2020 Equity Incentive Plan (the 2020 Plan). All directors, officers, employees and consultants (including prospective directors, officers, employees and consultants) of Calavo and its subsidiaries are eligible to receive awards under the 2020 Plan. This is a Restricted Stock Awards (RSAs) On November 3, 2022, our former Chief Executive Officer (CEO) entered into an amendment to his employment agreement, which changed $100,000 of his guaranteed STIP cash bonus for fiscal 2022 to $100,000 worth of unrestricted Calavo common stock. On December 22, 2022, our CEO was granted . On December 1, 2022, our 10 directors were granted 3,478 restricted shares each (for a total of 34,780 shares). These shares have full voting rights and participate in dividends as if unrestricted. The closing share price of our stock on such grant date was . Two directors did not seek reelection in April of 2023, and, consequently, shares vested and became unrestricted. The total recognized stock-based compensation expense for these grants was million for the year ended October 31, 2023. On March 7, 2023, our former CEO was terminated. As part of his Separation Agreement, the remaining restricted shares that were granted as part of his original employment agreement were immediately vested. The total stock-based compensation expense recognized was The total recognized stock-based compensation expense for restricted stock awards was $2.3 million for each of the years ended October 31, 2023 and 2022. As of October 31, 2023, there was less than $0.1 million of unrecognized stock-based compensation costs related to non-vested RSAs, which the Company expects to recognize over a weighted-average period of years. A summary of restricted stock activity, related to our 2011 Plan and 2020 Plan, is as follows (in thousands, except for per share amounts): Weighted-Average Aggregate Number of Shares Grant Price Intrinsic Value Outstanding at October 31, 2022 67 $ 45.01 Granted 38 $ 34.13 Vested (72) $ 41.85 Forfeited (4) $ 37.85 Outstanding at October 31, 2023 29 $ 35.24 $ 747 Restricted Stock Units (RSUs) and Performance Restricted Stock Units (PRSUs) On December 1, 2022, we issued RSUs and PRSUs for officers and other members of management as part of our long-term incentive plan. The RSUs are time-based and vest annually in equal amounts over a three-year period. The PRSUs are based on three-year cumulative performance targets of net sales, adjusted EBITDA and return on invested capital and vest entirely at the third anniversary. We granted 66,325 RSUs and 66,325 PRSUs at a grant price of $34.51 . On March 7, 2023, our former CEO was terminated. As part of his Separation Agreement, PRSUs immediately vested. The accelerated stock-based compensation expense recognized was million for the year ended October 31, 2023. With his termination, RSUs immediately vested. The accelerated stock-based compensation expense recognized was million for the year ended October 31, 2023. With these departures RSUs were forfeited. On November 1, 2023, each of our 8 directors were granted 4,929 RSUs each (for a total of 39,432 RSUs) at a price of $24.35 and will vest in one year. The total recognized stock-based compensation expense for RSUs was $1.6 million and $0.7 million for the year ended October 31, 2023 and 2022, respectively. As of October 31, 2023, there was $1.2 million of unrecognized stock-based compensation costs related to non-vested RSUs, which the Company expects to recognize over a weighted-average period of 1.8 years. A combined summary of RSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts): Number of Shares Weighted-Average Aggregate Represented Grant Price Intrinsic Value Outstanding at October 31, 2022 52 $ 39.17 Granted 68 $ 34.46 Vested (32) $ 39.25 Forfeited (37) $ 35.65 Outstanding at October 31, 2023 51 $ 35.36 $ 1,284 At the end of each reporting period, the Company will adjust compensation expense for the PRSUs based on its best estimate of attainment of the specified performance targets. The cumulative effect on current and prior periods of a change in the estimated number of PRSUs that are expected to be earned will be recognized as an adjustment in the period of the adjustment. As of October 31, 2023, the Company determined that it was not probable that any of the PRSUs for the 2022 or 2023 three-year cumulative performance grant would vest. The Company recorded a net reversal of approximately million of previously amortized stock-based compensation for the year months ended October 31, 2023, for all PRSUs. The total recognized stock-based compensation expense for PRSUs was The summary of PRSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts): Number of Shares Weighted-Average Aggregate Represented Grant Price Intrinsic Value Outstanding at October 31, 2022 31 $ 37.49 Granted 66 $ 34.51 Vested (14) $ 35.65 Forfeited (33) $ 35.35 Adjusted for performance factor (50) $ 35.22 Outstanding at October 31, 2023 — $ — $ — Stock Options Stock options are granted with exercise prices of not less than the fair market value at grant date, generally vest over one two after the vest date. We settle stock option exercises with newly issued shares of common stock. We measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest. (i) 200,000 shares subject to the option shall vest and become exercisable on March 10, 2024; (ii) 100,000 shares subject to the option shall vest and become exercisable (1) if the closing price per share of the Company’s common stock, as reported by The Nasdaq Stock Market, is greater than or equal to $50.00 (the “Target Share Price”), and (2) the average closing price per share of the Company’s common stock for any thirty (30) day period following achievement of the Target Share Price (the “Thirty-day Average Share Price”), is greater than or equal to $50.00, as reported by Nasdaq; (iii) 100,000 shares subject to the option shall vest and become exercisable (1) upon achievement of the Target Share Price, and (2) the Thirty-day Average Share Price is greater than or equal to $60.00 , as reported by Nasdaq; and (iv) 100,000 shares subject to the option shall vest and become exercisable (1) upon achievement of the Target Share Price, and (2) the Thirty-day Average Share Price is greater than or equal to $70.00 , as reported by Nasdaq; provided, however, that satisfaction of each Milestone is subject to our newly appointed CEO continuing as the President and CEO of the Company through each vesting event; and provided further that regardless of when he achieves the Milestones set forth in subsections (ii) through (iv) above, the applicable tranche shall only vest on or after March 10, 2024. We measure the fair value of our stock option awards on the date of grant. The following assumptions were used in the estimated grant date fair value calculations for stock options: March 2023 Risk-free interest rate 4.31 % Expected volatility 35.0 % Dividend yield 1.6 % Expected life (years) 3.0 The expected stock price volatility rates were based on the historical volatility of our common stock. The risk free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for periods approximating the expected life of the option. The expected life represents the average period of time that options granted are expected to be outstanding, as calculated using the simplified method described in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107. The Black-Scholes-Merton and lattice-based option valuation models were developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because options held by our directors and employees have characteristics significantly different from those of traded options, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of these options. For the market award, we determined both the fair value and derived service period using a Monte Carlo simulation model on the closing date. Based on the above details and assumptions, we valued these options at million. We will amortize this amount on a straight-line basis over the derived service period. The total recognized stock-based compensation expense for options was $1.3 million for the year ended October 31, 2023. As of October 31, 2023, there was $0.7 million of unrecognized stock-based compensation costs related to options, which the Company expects to recognize over a weighted-average period of 0.4 years. A summary of stock option activity, related to our 2011 and 2020 Management Incentive Plan, is as follows (in thousands, except for per share amounts): Weighted-Average Aggregate Exercise Intrinsic Number of Shares Price Value Outstanding at October 31, 2022 27 $ 44.67 Exercised (2) $ 23.48 Granted 500 $ 24.39 Outstanding at October 31, 2023 525 $ 25.44 $ 475 Exercisable at October 31, 2023 17 $ 49.52 $ — |
Dividends
Dividends | 12 Months Ended |
Oct. 31, 2023 | |
Dividends | |
Dividends | 13. Dividends In November 2022, we announced that we would begin declaring and paying dividends quarterly rather than annually which had been our prior practice. On December 14, 2022, we paid a dividend of $0.2875 per share, or an aggregate of $5.2 million, to shareholders of record on November 16, 2022. million to shareholders of record on June 27, 2023. On September 1, 2023, our board of directors declared a cash dividend of $0.10 per share. This dividend was paid on October 11, 2023, to shareholders of record on September 27, 2023. |
Mexican IVA taxes receivable
Mexican IVA taxes receivable | 12 Months Ended |
Oct. 31, 2023 | |
Mexican IVA taxes receivable | |
Mexican IVA taxes receivable | 14. Mexican IVA taxes receivable Included in other assets are tax receivables due from the Mexican government for value-added taxes (IVA) paid in advance. CDM is charged IVA by vendors on certain expenditures in Mexico, which, insofar as they relate to the exportation of goods, translate into IVA amounts receivable from the Mexican government. As of October 31, 2023, and October 31, 2022, CDM IVA receivables totaled $49.9 million (913.6 million Mexican pesos) and $43.6 million (865.4 million Mexican pesos). Historically, CDM received IVA refund payments from the Mexican tax authorities on a timely basis. Beginning in fiscal 2014 and continuing into fiscal 2021, however, the tax authorities began carrying out more detailed reviews of our refund requests and our supporting documentation. Additionally, they are also questioning the refunds requested attributable to IVA paid to certain suppliers that allegedly did not fulfill their own tax obligations. We believe these factors, and others, have contributed to delays in the processing of IVA claims by the Mexican tax authorities. Currently, we are in the process of collecting such balances, primarily through regular administrative processes, but these amounts may ultimately need to be recovered through Administrative Appeals and/or legal means. During the first quarter of fiscal 2017, the tax authorities informed us that their internal opinion, based on the information provided by the local SAT office, considers that CDM is not properly documented relative to its declared tax structure and therefore CDM cannot claim the refundable IVA balance. CDM has strong arguments and supporting documentation to sustain its declared tax structure for IVA and income tax purposes. CDM started an Administrative Appeal for the IVA related to the request of the months of July, August and September of 2015 (the “2015 Appeal”) in order to assert its argument that CDM is properly documented and to therefore change the SAT’s internal assessment. In August 2018, we received a favorable ruling from the SAT’s Legal Administration in Michoacan on the 2015 Appeal indicating that they believe CDM’s legal interpretation of its declared tax structure is indeed accurate. While favorable on this central matter of CDM’s declared tax structure, the ruling, however, still does not recognize the taxpayers right to a full refund for the IVA related to the months of July, August and September 2015. Therefore, in October 2018, CDM filed a substance-over-form Annulment Suit in the Federal Tax Court to recover its full refund for IVA over the subject period, which is currently pending resolution. In April 2022, the Tax Court issued the ruling for the months of July, August and September 2015 through which it was declared that the following resolutions were resolved: ● It is recognized that CDM operates as a maquila under the authorization of the Ministry of Finance. ● It is recognized that all bank deposits corresponding to the purchase of avocados on behalf of Calavo Growers Inc. (CGI), are subject to the maquila program and it is not accruable income for purposes of income tax nor activities subject to VAT. ● It is recognized that IVA is recoverable, since CDM demonstrated the existence of operations carried under the maquila services. ● Resolved that certain IVA amounts attributed to the purchase of certain packing materials are not recoverable as CDM was not the buyer on record and therefore did not pay for the materials, which approximated $6.9 million pesos (approximately $0.4 million USD). In January 2023, the Federal Tax Court issued a definitive resolution confirming the ruling from April 2022, ordering SAT to refund approximately $18 million pesos (approx. $1.1 million USD at October 31, 2023) and confirming that the $6.9 million pesos (approx. $0.4 million USD at October 31, 2023) related to packing materials will not be recoverable. For the year ended October 31, 2023, we recognized a reserve of $1.4 million USD for Mexican IVA tax receivables related to certain packing material vendors corresponding to the years 2013 and 2015. This reserve includes the amounts included in the January 2023 ruling as well as other similar receivables that are subject to proceedings in this same Federal Tax Court. In June 2023, we received $2.8 million from the SAT related to Mexican IVA tax receivables corresponding to fiscal year 2013, which was consistent with the January 2023 definitive resolution. Of this amount, $1.7 million was interest and inflation related adjustments. This $1.7 million was netted with expenses related to Mexican tax matters on the statement of operations. Various cases from IVA periods in April, June and August 2017 were issued negative resolutions and the deadline to challenge the resolutions has elapsed. The cases can still be pursued but must be re-initiated providing new evidence. Although the likelihood of success is still relatively high, the requirement to re-initiate has reduced the likelihood of recovery and therefore the Company has reserved $1.1 million as of October 2023. We believe that our operations in Mexico are properly documented, and our internationally recognized tax advisors believe that there are legal grounds to prevail in collecting the corresponding IVA amounts. With assistance from our internationally recognized tax advisory firm, as of October 31, 2023, CDM has filed Administrative Appeals for months for which IVA refunds have been denied by the SAT, and will continue filing such appeals for any months for which refunds are denied in the future. Therefore, it is probable that the Mexican tax authorities will ultimately authorize the refund of the remaining IVA amounts. |
Leases
Leases | 12 Months Ended |
Oct. 31, 2023 | |
Leases | |
Leases | 15. Leases We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the term. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. We also lease certain property, plant and equipment, including office facilities, under operating leases. The lease term consists of the noncancellable period of the lease and the periods covered by options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain any residual value guarantees. Lease Position The following table presents the lease-related assets and liabilities recorded on the balance sheet as of October 31, 2023 and 2022 (in thousands): October 31, October 31, 2023 2022 Assets Non-current assets: Operating lease assets Operating lease right-of-use assets $ 48,033 $ 54,518 Finance lease assets Property, plant and equipment, net 6,777 5,721 $ 54,810 $ 60,239 Liabilities Current liabilities: Operating Current portion of operating leases $ 7,062 $ 6,925 Finance Current portion of long-term obligations and finance leases 1,604 1,574 Long-term obligations Operating Long-term operating leases, less current portion 45,393 52,140 Finance Long-term obligations and finance leases, less current portion 5,647 4,447 $ 59,706 $ 65,086 Weighted-average remaining lease term: Fiscal 2023 Fiscal 2022 Operating leases 8.2 years 9.3 years Finance leases 6.5 years 6.9 years Weighted-average discount rate: Operating leases 3.10 % 2.87 % Finance leases 4.83 % 3.62 % Lease Costs The following table presents certain information related to the lease costs for finance and operating leases for the years ended October 31, 2023 and 2022 (in thousands): Year ended Year ended October 31, 2023 October 31, 2022 Amortization of financing lease assets (recorded in cost of sales) $ 1,913 $ 1,756 Operating lease cost 8,511 8,733 Short-term lease cost 2,476 2,483 Sublease income — (30) Variable lease cost 198 133 Interest on financing lease liabilities 273 213 Total lease cost $ 13,371 $ 13,288 Other Information The following table presents supplemental cash flow information related to the leases for the years ended October 31, 2023 and 2022 (in thousands): Year ended Year ended Cash paid for amounts included in the measurement of lease liabilities October 31, 2023 October 31, 2022 Operating cash flows for operating leases $ 7,043 $ 7,012 Financing cash flows for finance leases 1,793 1,683 Operating cash flows for finance leases 262 213 The total right-of-use assets obtained in exchange for new operating leases for the years ended October 31, 2023 and 2022 were $0.7 million and $1.0 million, respectively. Undiscounted Cash Flows The following table reconciles the undiscounted cash flows for each of the first five years and total remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of October 31, 2023 (in thousands): Operating Finance Leases Leases 2024 $ 8,556 $ 1,909 2025 7,539 1,415 2026 7,058 1,137 2027 6,670 997 2028 6,501 748 Thereafter 23,204 2,235 Total lease payments 59,528 8,441 Less: imputed interest 7,073 1,190 Total lease liability $ 52,455 $ 7,251 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 31, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Business | Business Calavo Growers, Inc. (referred to in this report as “Calavo”, the “Company”, “we’, “us” or “our”), is a global leader in the avocado industry and a provider of value-added fresh food. Our expertise in marketing and distributing avocados, prepared avocado products, and other perishable foods allows us to deliver a wide array of fresh and prepared food products to retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers on a worldwide basis. We procure avocados from California, Mexico and other growing regions around the world. Through our various operating facilities, we (i) sort, pack, and/or ripen avocados, tomatoes and/or Hawaiian grown papayas, (ii) create, process and package a portfolio of healthy fresh foods including fresh-cut fruit and vegetables, and prepared foods and (iii) process and package guacamole. We distribute our products both domestically and internationally and we report our operations in different business segments: Grown and Prepared. |
Basis of Presentation | The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. |
Consolidated financial statements | Our consolidated financial statements include the accounts of Calavo Growers, Inc. and our wholly owned subsidiaries, Calavo de Mexico S.A. de C.V. (Calavo de Mexico), Calavo Growers de Mexico, S. de R.L. de C.V. ( Calavo Growers de Mexico), Maui Fresh International, Inc. (Maui), Hawaiian Sweet, Inc. (HS), CW Hawaii Pride, LLC (HP), Renaissance Food Group, LLC (RFG), and Avocados de Jalisco, S.A.P.I. de C.V. (Avocados de Jalisco), in which we have an 83% ownership interest. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to valuation allowances for valuation allowances for accounts, goodwill, grower advances, inventories, long-lived assets, valuation of and estimated useful lives of identifiable intangible assets, stock-based compensation, promotional allowances and income taxes. On an ongoing basis, management reviews its estimates based upon currently available information. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid financial instruments purchased with an original maturity date of three months or less to be cash equivalents. The carrying amounts of cash and cash equivalents approximate their fair values. |
Restricted Cash | Restricted Cash We have $0.8 million and $1.1 million in restricted cash at October 31, 2023 and 2022, respectively. In connection with the New Credit Facility, we temporarily posted cash collateral to satisfy certain collateral requirements as we transitioned banks providing letters of credit related to our workers compensation policies. As of October 31, 2023, we recorded $ million and $ million as restricted cash and prepaid and other current assets, respectively, related to this transition. In the prior year, we had restricted cash in our subsidiary Calavo de Mexico. This cash was restricted due to the 2013 tax assessment. In November 2022, this restriction was lifted. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of non-trade receivables, infrastructure advances and prepaid expenses. Non-trade receivables were $6.8 million and $4.8 million at October 31, 2023 and 2022, respectively. Included in non-trade receivables are $2.7 million and $1.8 million related to the current portion of non-CDM Mexican IVA (i.e. value-added) taxes at October 31, 2023 and 2022 (See Note 14). Infrastructure advances are discussed below. Prepaid expenses totaling |
Accounts Receivable | Accounts Receivable Trade accounts receivable are reported at amounts due from customers, net of an allowance for doubtful accounts and customer deductions accounted for as variable consideration. The Company performs credit evaluations of customers and evaluates the need for allowances for potential credit losses based on historical experience, as well as current and expected general economic conditions. The total allowance for estimated uncollectable accounts receivable balances and customer deductions were $5.2 million and $4.2 million as of October 31, 2023 and 2022, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is computed on a monthly weighted-average basis, which approximates the first-in, first-out method; market is based upon estimated replacement costs. Costs included in inventory primarily include the following: fruit, picking and hauling, overhead, labor, materials and freight. |
Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant, and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are stated at cost and amortized over the lesser of their estimated useful lives or the term of the lease, using the straight-line method. Useful lives are as follows: buildings and improvements - . Significant repairs and maintenance that increase the value or extend the useful life of our fixed asset are capitalized. Ongoing maintenance and repairs are charged to expense. |
Goodwill and Acquired Intangible Assets | Goodwill and Acquired Intangible Assets Goodwill, defined as unidentified asset(s) acquired in conjunction with a business acquisition, is tested for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We perform an assessment of goodwill for impairment on an annual basis, and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To the extent the carrying amount of the reporting unit’s allocated goodwill exceeds the unit’s fair value, we recognize an impairment of goodwill for the excess up to the amount of goodwill of that reporting unit. In fiscal 2023 and 2022, the Company’s estimated fair value significantly exceeded its carrying value. The fair value of the Company’s reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow analysis, a market approach is utilized using observable market data such as comparable companies in similar lines of business that are publicly traded. The Company concluded based on its quantitative assessment that no goodwill impairment existed in the fiscal years ended October 31, 2023 and 2022. Goodwill impairment testing requires significant judgment and management estimates, including, but not limited to, the determination of (i) the number of reporting units, (ii) the goodwill and other assets and liabilities to be allocated to the reporting units and (iii) the fair values of the reporting units which includes forecasted cash flow. The estimates and assumptions described above, along with other factors such as discount rates, will significantly affect the outcome of the impairment tests and the amounts of any resulting impairment losses. |
Long-lived Assets | Long-lived Assets Long-lived assets, including fixed assets and intangible assets (other than goodwill), are continually monitored and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The determination of recoverability is based on an estimate of undiscounted cash flows expected to result from the use of an asset and its eventual disposition. The estimate of undiscounted cash flows is based upon, among other things, certain assumptions about future operating performance, growth rates and other factors. Estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to the business model or changes in operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, an impairment loss will be recognized, measured as the amount by which the carrying value exceeds the fair value of the asset. For fiscal years 2023 and 2022, we performed our annual assessment of long-lived assets and determined that |
Investments | Investments We account for non-marketable investments using the equity method of accounting if the investment gives us the ability to exercise significant influence over, but not control, an investee. Significant influence generally exists when we have an ownership interest representing between 20% and 50% of the voting stock of the investee. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions. In December 2014, Calavo formed a wholly-owned subsidiary Calavo Growers De Mexico, S. de R.L. de C.V. (Calavo Sub). In July 2015, Calavo Sub entered into a Shareholder Agreement with Grupo Belo del Pacifico, S.A. de C.V., (Belo) a Mexican company owned by Agricola Belher, and Agricola Don Memo, S.A. de C.V. (Don Memo). Don Memo, a Mexican corporation formed in July 2013, is engaged in the business of owning and improving land in Jalisco, Mexico for the growing and sale of tomatoes and other produce. Belo and Calavo Sub have an equal one-half ownership interest in Don Memo. Pursuant to a management service agreement, Belo, through its officers and employees, shall have day-to-day power and authority to manage the operations. This investment contribution represent Calavo Sub’s ownership in Don Memo, which is included in investment in unconsolidated entities on our balance sheet. We use the equity method to account for this investment. As of October 31, 2023 and 2022, we have an investment of |
Advances to Suppliers | Advances to Suppliers We advance funds to third-party growers primarily in Mexico for various farming needs. Typically, we obtain collateral (i.e. fruit, fixed assets, etc.) that approximates the value at risk, prior to making such advances. We continuously evaluate the ability of these growers to repay advances in order to evaluate the possible need to record an allowance. No such allowance was required at October 31, 2023 and 2022. Pursuant to our distribution agreement with Agricola Belher (Belher) of Mexico, a producer of fresh vegetables, primarily tomatoes, for export to the U.S. market, Belher agreed, at their sole cost and expense, to harvest, pack, export, ship, and deliver tomatoes exclusively to our Company, primarily our Arizona facility. In exchange, we agreed to sell and distribute such tomatoes, make advances to Belher for operating purposes, provide additional advances as shipments are made during the season (subject to limitations, as defined), and return the proceeds from such tomato sales to Belher, net of our commission and aforementioned advances. These advances will be collected through settlements by the end of each year. As of October 31, 2023 and 2022, we have total advances of Similar to Belher, we make advances to Don Memo for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from such tomato sales to Don Memo, net of our commission and aforementioned advances. As of October 31, 2023 and 2022, we have total advances of $7.3 million and $7.0 million, respectively, to Don Memo, which is recorded in advances to suppliers, offset by tomato liabilities from the sales of tomatoes per the tomato marketing agreement. We also have a distribution agreement with tomato grower Exportadora Silvalber (Silvalber). We made |
Infrastructure Advances | Infrastructure Advances Pursuant to our infrastructure agreements, we make advances to be used solely for the acquisition, construction, and installation of improvements to and on certain land owned/controlled by Belher and Don Memo, as well as packing line equipment. In October 2020, we entered into an infrastructure loan agreement with Don Memo for $2.4 million secured by Don Memo’s property and equipment. This infrastructure loan accrues interest at . In October 2020, we advanced million related to this loan agreement. We advanced an additional million in the first, and second quarters of fiscal 2021, respectively. We have a total balance outstanding of In July 2021, we made a bridge loan of $3.5 million to Belher. This loan is secured by certain farmland in Mexico and accrues interest at million on July 31, 2024. As part of this amended loan agreement, we can withhold payments on both the infrastructure advances and the bridge loan through the netting the amount due against the grower payable due to Belher. For each the years ended October 31, 2023 and 2022, we withheld |
Accrued Expenses | Accrued Expenses Included in accrued expenses are liabilities related to the receipt of goods and/or services for which an invoice has not yet been received. These totaled approximately $14.5 million and $28.7 million for the years ended October 31, 2023 and 2022, respectively. |
Leases | Leases Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The Company makes a determination if an arrangement constitutes a lease at inception, and categorizes the lease as either an operating or finance lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. For finance leases, we recognize interest expense and amortization of the right-of-use asset, and for operating leases, we recognize lease expense on a straight-line basis over the lease term. The interest expense amortization component of the finance lease liabilities is recorded within interest expense on the consolidated statements of operations. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. We estimated our incremental borrowing rate based upon a synthetic credit rating and yield curve analysis. As a result, the incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of net consideration expected to be received in exchange for transferring products. Revenue from product sales is governed primarily by customer pricing and related purchase orders (“contracts”) which specify shipping terms and certain aspects of the transaction price including variable considerations such as rebates, discounts and other sales incentives. Contracts are at standalone pricing. The performance obligation in these contracts is determined by each of the individual purchase orders and the respective stated quantities, with revenue being recognized at a point in time when obligations under the terms of the agreement are satisfied. This generally occurs with the transfer of control of our products to the customer and the product is delivered. The Company's customers have an implicit and explicit right to return non-conforming products. A provision for payment discounts and product return allowances, which is estimated, is recorded as a reduction of sales in the same period that the revenue is recognized. Sales Incentives and Other Promotional Programs The Company routinely offers sales incentives and discounts through various regional and national programs to our customers and consumers. These programs include product discounts or allowances, product rebates, product returns, one-time or ongoing trade-promotion programs with customers and consumer coupon programs that require the Company to estimate the expected costs of such programs. The costs associated with these activities are accounted for as reductions to the transaction price of the Company’s products and are, therefore, recorded as reductions to gross sales at the time of sale. The Company bases its estimates of incentive costs on historical trend experience with similar programs, actual incentive terms per customer contractual obligations and expected levels of performance of trade promotions, utilizing customer and sales organization inputs. The Company maintains liabilities at the end of each period for the estimated incentive costs incurred but unpaid for these programs. Differences between estimated and actual incentive costs are generally not material and are recognized in earnings in the period such differences are determined. Reserves for product returns, accrued rebates and promotional accruals are included in the consolidated balance sheets as part of accounts receivable. Principal vs. Agent Considerations We frequently enter into consignment arrangements with avocado and tomato growers and packers located outside of the U.S. and growers of certain perishable products in the U.S. We evaluate whether the performance obligation is a promise to transfer services to the customer (as the principal) or to arrange for services to be provided by another party (as the agent) using a control model. This evaluation determined that the Company is in control of establishing the transaction price, managing all aspects of the shipments process and taking the risk of loss for delivery, collection, and returns. Based on the Company’s evaluation of the control model, it determined that all of the Company’s major businesses act as the principal rather than the agent within their revenue arrangements and such revenues are reported on a gross basis. |
Customers | Customers We sell to retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesale customers. Our top ten customers accounted for approximately of our consolidated net sales in fiscal years 2023, 2022 and 2021, respectively. Sales to our largest customer, Kroger (including its affiliates), represented approximately of net sales in fiscal years 2023, 2022 and 2021, respectively. No other single customer accounted for more than 10% of our net sales in any of the last three fiscal years. |
Shipping and Handling | Shipping and Handling We include shipping and handling fees billed to customers in net sales. Amounts incurred by us for freight are included in cost of goods sold. |
Promotional Allowances | Promotional Allowances We provide for promotional allowances at the time of sale, based on our historical experience. Our estimates are generally based on evaluating the historical relationship between promotional allowances and gross sales. The derived percentage is then applied to the current period’s sales revenues in order to arrive at the appropriate debit to sales allowances for the period. The offsetting credit is made to an allowance on accounts receivable. When certain amounts of specific customer accounts are subsequently identified as promotional, they are written off against this allowance. Actual amounts may differ from these estimates and such differences are recognized as an adjustment to net sales in the period they are identified. |
Consignment Arrangements | Consignment Arrangements We frequently enter into consignment arrangements with avocado and tomato growers and packers located outside of the U.S. and growers of certain perishable products in the U.S. Although we generally do not take legal title to these avocados and perishable products, we do assume responsibilities (principally assuming credit risk, inventory loss and delivery risk, and pricing risk) that are consistent with acting as a principal in the transaction. Accordingly, the accompanying financial statements include sales and cost of sales from the sale of avocados and perishable products procured under consignment arrangements. 2023 2022 2021 Sales $ 56,811 $ 59,748 $ 52,287 Cost of Sales 51,937 53,238 45,945 Gross Profit $ 4,874 $ 6,510 $ 6,342 |
Advertising Expense | Advertising Expense Advertising costs are expensed when incurred and are generally included as a component of selling, general and administrative expense. Such costs were approximately $0.4 million, $0.6 million and $0.4 million for fiscal years 2023, 2022, and 2021, respectively. |
Research and Development | Research and Development Research and development costs are expensed as incurred and are generally included as a component of selling, general and administrative expense. Total research and development costs for fiscal year 2023, 2022 and 2021 was approximately $0.1 million, $0.1 million and $0.3 million, respectively. |
Restructuring Costs | Restructuring Costs For the year ended October 31, 2022, we recorded $2.8 million of consulting expenses (included in selling, general and administrative expenses) related to an enterprise-wide strategic business review conducted for the purpose of restructuring to improve the profitability of the organization and efficiency of our operations. We also recorded $5.5 million and $2.0 million for the years ended October 31, 2023 and 2022, respectively, of management recruiting and severance costs related to this restructuring initiative. |
Other Income | Other Income Included in other income is dividend income totaling $0 million, $0.8 million, and $0.6 million for fiscal years 2023, 2022 and 2021, respectively. See Note 8 for related party disclosure related to other income. |
Income Taxes | Income Taxes We account for deferred tax liabilities and assets for the future consequences of events that have been recognized in our consolidated financial statements or tax returns. Measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and tax bases of our assets and liabilities result in a deferred tax asset, we perform an evaluation of the probability of being able to realize the future benefits indicated by such asset. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or all of the deferred tax asset will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As a multinational corporation, we are subject to taxation in many jurisdictions, and the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. If we ultimately determine that the payment of these liabilities will be unnecessary, the liability will be reversed and we will recognize a tax benefit during the period in which it is determined the liability no longer applies. Conversely, we record additional tax charges in a period in which it is determined that a recorded tax liability is less than the ultimate assessment is expected to be. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. |
Basic and Diluted Net Loss per Share | Basic and Diluted Net Loss per Share Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock options and contingent consideration. Diluted earnings per common share is calculated using the weighted-average number of common shares outstanding during the period after consideration of the dilutive effect of stock options and the effect of contingent consideration shares. Basic and diluted net loss per share is calculated as follows (U.S. dollars in thousands, except per share data): Year ended October 31, 2023 2022 2021 Numerator: Net loss attributable to Calavo Growers, Inc. $ (8,344) $ (6,249) $ (11,818) Denominator: Weighted average shares - Basic 17,750 17,663 17,621 Effect on dilutive securities – Restricted stock/units/options (1) — — — Weighted average shares - Diluted 17,750 17,663 17,621 Net loss per share attributable to Calavo Growers, Inc: Basic $ (0.47) $ (0.35) $ (0.67) Diluted $ (0.47) $ (0.35) $ (0.67) (1) For the year ended October 31, 2023, 2022 and 2021, approximately 104,000 shares, 82,000 shares, and 42,000 shares of common stock equivalents were excluded in the computation of diluted net loss per share, respectively, as the effect would be anti-dilutive since the Company reported a net loss. |
Stock-Based Compensation | Stock-Based Compensation We account for awards of equity instruments issued to employees under the fair value method of accounting and recognize such amounts in our statements of operations. We measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest. For the years ended October 31, 2023, 2022 and 2021, we recognized compensation expense of $5.2 million, $3.1 million, and $4.0 million related to stock-based compensation, respectively (See Note 12). For our restricted stock awards, the value of the stock-based compensation was determined from quoted market prices at the date of the grant. For our stock option awards, w |
Foreign Currency Translation and Remeasurement | Foreign Currency Translation and Remeasurement Our foreign operations are subject to exchange rate fluctuations and foreign currency transaction costs. The functional currency of our foreign subsidiaries is the United States (U.S.) dollar. As a result, monetary assets and liabilities are translated into U.S. dollars at exchange rates as of the balance sheet date and non-monetary assets, liabilities and equity are translated at historical rates. Sales and expenses are translated using a weighted-average exchange rate for the period. Gains and losses resulting from those remeasurements are included in income. Gains and losses resulting from foreign currency transactions are also recognized in income. Total foreign currency translation gains for fiscal 2023 and 2021, net of losses, was |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We believe that the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings approximates fair value based on either their short-term nature or on terms currently available to the Company in financial markets. Due to current market rates, we believe that our fixed-rate long-term obligations and finance leases have nearly the same fair value and carrying value of approximately |
Derivative Financial Instruments | Derivative Financial Instruments We were not a party to any material derivative instruments during the fiscal year. It is currently our intent not to use derivative instruments for speculative or trading purposes. Additionally, we do not use any hedging or forward contracts to offset market volatility. |
Noncontrolling Interest | Noncontrolling Interest The following tables reconcile shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands). Year ended Year ended Avocados de Jalisco noncontrolling interest October 31, 2023 October 31, 2022 Noncontrolling interest, beginning $ 1,015 $ 1,368 Net income (loss) attributable to noncontrolling interest of Avocados de Jalisco 377 (353) Noncontrolling interest, ending $ 1,392 $ 1,015 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Schedule of Financial Statements of Consignment Arrangements | 2023 2022 2021 Sales $ 56,811 $ 59,748 $ 52,287 Cost of Sales 51,937 53,238 45,945 Gross Profit $ 4,874 $ 6,510 $ 6,342 |
Schedule of basic and diluted net income per share | Basic and diluted net loss per share is calculated as follows (U.S. dollars in thousands, except per share data): Year ended October 31, 2023 2022 2021 Numerator: Net loss attributable to Calavo Growers, Inc. $ (8,344) $ (6,249) $ (11,818) Denominator: Weighted average shares - Basic 17,750 17,663 17,621 Effect on dilutive securities – Restricted stock/units/options (1) — — — Weighted average shares - Diluted 17,750 17,663 17,621 Net loss per share attributable to Calavo Growers, Inc: Basic $ (0.47) $ (0.35) $ (0.67) Diluted $ (0.47) $ (0.35) $ (0.67) (1) For the year ended October 31, 2023, 2022 and 2021, approximately 104,000 shares, 82,000 shares, and 42,000 shares of common stock equivalents were excluded in the computation of diluted net loss per share, respectively, as the effect would be anti-dilutive since the Company reported a net loss. |
Schedule of reconciliation of shareholders' equity attributable to noncontrolling interest | The following tables reconcile shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands). Year ended Year ended Avocados de Jalisco noncontrolling interest October 31, 2023 October 31, 2022 Noncontrolling interest, beginning $ 1,015 $ 1,368 Net income (loss) attributable to noncontrolling interest of Avocados de Jalisco 377 (353) Noncontrolling interest, ending $ 1,392 $ 1,015 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Inventories | |
Schedule of Inventories | Inventories consist of the following (in thousands): October 31, October 31, 2023 2022 Fresh fruit $ 19,870 $ 16,938 Packing supplies and ingredients 9,438 14,176 Finished prepared foods 10,122 7,716 Total $ 39,430 $ 38,830 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Property, Plant, and Equipment | |
Summary of Property, Plant, and Equipment | Property, plant, and equipment consist of the following (in thousands): October 31, 2023 2022 Land $ 11,008 $ 11,008 Buildings and improvements 46,627 45,733 Leasehold improvements 21,524 19,030 Equipment 127,876 121,441 Information systems - hardware and software 14,767 11,920 Construction in progress 6,846 8,307 228,648 217,439 Less accumulated depreciation and amortization (115,919) (104,129) $ 112,729 $ 113,310 |
Other assets and Intangibles (T
Other assets and Intangibles (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Other assets and Intangibles | |
Schedule of Other Assets | Other assets consist of the following (in thousands): October 31, October 31, 2023 2022 Mexican IVA (i.e. value-added) taxes receivable, net (see Note 14) $ 49,888 $ 43,625 Infrastructure advances (see Note 2) 1,641 1,241 Bridge loan to Agricola Belher (see Note 2) — 1,700 Other 930 604 Total $ 52,459 $ 47,170 |
Schedule of Intangible Assets | The intangible assets consist of the following (in thousands): October 31, 2023 October 31, 2022 Weighted- Gross Net Gross Net Average Carrying Accum. Book Carrying Accum. Book Useful Life Value Amortization Value Value Amortization Value Customer list/relationships 8 years $ 17,100 $ (12,517) $ 4,583 $ 17,340 $ (11,373) $ 5,967 Trade names 8 years 3,949 (3,109) 840 4,060 (3,100) 960 Trade secrets/recipes 9 years 170 (170) — 630 (626) 4 Brand name intangibles indefinite 275 — 275 275 — 275 Intangibles, net $ 21,494 $ (15,796) $ 5,698 $ 22,305 $ (15,099) $ 7,206 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Income Taxes | |
Summary of Income Tax Provision (Benefit) | 2023 2022 2021 Current: Federal $ (387) $ 2,012 $ (3,449) State 280 147 323 Foreign 1,143 1,209 16,703 Total current 1,036 3,368 13,577 Deferred: Federal (468) (162) 790 State (337) 746 (343) Foreign 2,656 (701) (3,934) Total deferred 1,851 (117) (3,487) Change in valuation allowance 3,055 — 657 Total income tax provision $ 5,942 $ 3,251 $ 10,747 |
Schedule of loss before income taxes | 2023 2022 2021 Domestic $ (8,741) $ (1,411) $ (4,959) Foreign 6,716 (1,940) 3,784 Income (loss) before taxes $ (2,025) $ (3,351) $ (1,175) |
Components of Deferred Taxes | Significant components of our deferred tax assets (liabilities) as of October 31, are as follows (in thousands): 2023 2022 Intangible assets $ 941 $ 2,828 Stock-based compensation 316 715 State taxes 7 6 Allowance for accounts receivable 1,276 936 Inventories 591 442 Accrued liabilities 2,238 1,143 Operating lease liabilities 14,444 14,861 Net operating loss 4,109 549 Capital loss carryover 806 804 Credits and incentives 1,099 1,194 Total deferred income tax assets 25,827 23,478 Property, plant, and equipment (6,340) (2,002) Operating lease - right of use assets (12,111) (13,723) Other (227) (490) Total deferred income tax liabilities (18,678) (16,215) Valuation allowance (4,885) (1,830) Net deferred income tax assets $ 2,264 $ 5,433 The Company’s net deferred income tax assets as presented in the consolidated balance sheets consists of the following items as of October 31, (in thousands): Year Ended October 31, 2023 2022 Deferred income tax assets $ 3,010 $ 5,433 Deferred income tax liabilities (746) — Net deferred income tax assets $ 2,264 $ 5,433 |
Reconciliation of effective tax rate | 2023 2022 2021 Federal statutory tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal effects 0.9 (1.3) 11.6 Rate differential on NOL carryback — — 125.8 Foreign tax rate differential (29.8) 5.2 16.1 Uncertain tax positions — 5.1 (1,059.9) Stock based compensation (26.3) (6.1) (16.7) Provision to return (12.3) (59.9) 39.2 US tax on foreign income, net (15.8) — — State rate change 0.9 (2.5) 9.2 Valuation allowance (150.7) (24.2) (44.1) Limits on executive compensation (21.6) — — Other permanent differences (19.1) (33.8) — Other (40.6) (0.5) (15.5) (293.4) % (97.0) % (913.3) % |
Reconciliation of unrecognized taxes | A reconciliation of the beginning and ending amount of gross unrecognized taxes (exclusive of interest and penalties) was as follows (in thousands): Year Ended October 31, 2023 2022 Beginning balance $ 11,131 $ 11,303 Reductions based on tax positions related to prior periods — (172) Gross increase - Tax positions in prior periods — — Gross increase - Tax positions in current period — — Ending balance $ 11,131 $ 11,131 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Segment Information | |
Schedule of segment gross margin | The following table sets forth sales, cost of sales, and gross profit by segment (in thousands) Intersegment Grown Prepared Elimins. Total (All amounts are presented in thousands) Year ended October 31, 2023 Net sales $ 529,025 $ 444,552 $ (1,629) $ 971,948 Cost of sales 476,862 426,759 (1,629) 901,992 Gross profit $ 52,163 $ 17,793 $ — $ 69,956 Year ended October 31, 2022 Net sales $ 700,270 $ 492,868 $ (2,065) $ 1,191,073 Cost of sales 650,105 469,188 (2,065) 1,117,228 Gross profit $ 50,165 $ 23,680 $ — $ 73,845 |
Schedule of sales by product and segment | The following table sets forth sales by product category, by segment (in thousands): Year ended October 31, 2023 Year ended October 31, 2022 Grown Prepared Total Grown Prepared Total Avocados $ 466,385 $ — $ 466,385 $ 645,944 $ — $ 645,944 Tomatoes 56,298 — 56,298 47,288 — 47,288 Papayas 10,432 — 10,432 11,422 — 11,422 Other fresh income 100 — 100 123 — 123 Fresh-cut products — 383,028 383,028 — 426,161 426,161 Guacamole — 70,611 70,611 — 74,970 74,970 Salsa — 796 796 — 1,860 1,860 Total gross sales 533,215 454,435 987,650 704,777 502,991 1,207,768 Less sales allowances (4,190) (9,883) (14,073) (4,507) (10,123) (14,630) Less intersegment eliminations (1,629) — (1,629) (2,065) — (2,065) Net sales $ 527,396 $ 444,552 $ 971,948 $ 698,205 $ 492,868 $ 1,191,073 Year ended October 31, 2022 Year ended October 31, 2021 Grown Prepared Total Grown Prepared Total Avocados $ 645,944 $ — $ 645,944 $ 536,969 $ — $ 536,969 Tomatoes 47,288 — 47,288 43,658 — 43,658 Papayas 11,422 — 11,422 10,884 — 10,884 Other fresh income 123 — 123 693 — 693 Fresh-cut products — 426,161 426,161 — 403,017 403,017 Guacamole — 74,970 74,970 — 75,681 75,681 Salsa — 1,860 1,860 — 2,784 2,784 Total gross sales 704,777 502,991 1,207,768 592,204 481,482 1,073,686 Less sales allowances (4,507) (10,123) (14,630) (3,677) (11,682) (15,359) Less intersegment eliminations (2,065) — (2,065) (2,497) — (2,497) Net sales $ 698,205 $ 492,868 $ 1,191,073 $ 586,030 $ 469,800 $ 1,055,830 |
Schedule of long-lived assets by geographic areas | Long-lived assets attributed to geographic areas as of October 31, are as follows (in thousands): United States Mexico Consolidated October 31, 2023 $ 77,791 $ 34,938 $ 112,729 October 31, 2022 $ 77,208 $ 36,102 $ 113,310 |
Long-Term Obligations (Tables)
Long-Term Obligations (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Long-Term Obligations | |
Schedule of long-term obligations | Long-term obligations at fiscal year ends consist of the following (in thousands): 2023 2022 Finance leases 7,251 6,021 Less current portion (1,604) (1,574) $ 5,647 $ 4,447 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Stock-Based Compensation | |
Summary of restricted stock award activity | A summary of restricted stock activity, related to our 2011 Plan and 2020 Plan, is as follows (in thousands, except for per share amounts): Weighted-Average Aggregate Number of Shares Grant Price Intrinsic Value Outstanding at October 31, 2022 67 $ 45.01 Granted 38 $ 34.13 Vested (72) $ 41.85 Forfeited (4) $ 37.85 Outstanding at October 31, 2023 29 $ 35.24 $ 747 |
Summary of RSU activity | A combined summary of RSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts): Number of Shares Weighted-Average Aggregate Represented Grant Price Intrinsic Value Outstanding at October 31, 2022 52 $ 39.17 Granted 68 $ 34.46 Vested (32) $ 39.25 Forfeited (37) $ 35.65 Outstanding at October 31, 2023 51 $ 35.36 $ 1,284 |
Summary of PRSU activity | The summary of PRSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts): Number of Shares Weighted-Average Aggregate Represented Grant Price Intrinsic Value Outstanding at October 31, 2022 31 $ 37.49 Granted 66 $ 34.51 Vested (14) $ 35.65 Forfeited (33) $ 35.35 Adjusted for performance factor (50) $ 35.22 Outstanding at October 31, 2023 — $ — $ — |
Assumptions for fair value stock options | March 2023 Risk-free interest rate 4.31 % Expected volatility 35.0 % Dividend yield 1.6 % Expected life (years) 3.0 |
Summary of stock option activity | Weighted-Average Aggregate Exercise Intrinsic Number of Shares Price Value Outstanding at October 31, 2022 27 $ 44.67 Exercised (2) $ 23.48 Granted 500 $ 24.39 Outstanding at October 31, 2023 525 $ 25.44 $ 475 Exercisable at October 31, 2023 17 $ 49.52 $ — |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Oct. 31, 2023 | |
Leases | |
Schedule of lease-related assets and liabilities and cost | The following table presents the lease-related assets and liabilities recorded on the balance sheet as of October 31, 2023 and 2022 (in thousands): October 31, October 31, 2023 2022 Assets Non-current assets: Operating lease assets Operating lease right-of-use assets $ 48,033 $ 54,518 Finance lease assets Property, plant and equipment, net 6,777 5,721 $ 54,810 $ 60,239 Liabilities Current liabilities: Operating Current portion of operating leases $ 7,062 $ 6,925 Finance Current portion of long-term obligations and finance leases 1,604 1,574 Long-term obligations Operating Long-term operating leases, less current portion 45,393 52,140 Finance Long-term obligations and finance leases, less current portion 5,647 4,447 $ 59,706 $ 65,086 Weighted-average remaining lease term: Fiscal 2023 Fiscal 2022 Operating leases 8.2 years 9.3 years Finance leases 6.5 years 6.9 years Weighted-average discount rate: Operating leases 3.10 % 2.87 % Finance leases 4.83 % 3.62 % Lease Costs The following table presents certain information related to the lease costs for finance and operating leases for the years ended October 31, 2023 and 2022 (in thousands): Year ended Year ended October 31, 2023 October 31, 2022 Amortization of financing lease assets (recorded in cost of sales) $ 1,913 $ 1,756 Operating lease cost 8,511 8,733 Short-term lease cost 2,476 2,483 Sublease income — (30) Variable lease cost 198 133 Interest on financing lease liabilities 273 213 Total lease cost $ 13,371 $ 13,288 Other Information The following table presents supplemental cash flow information related to the leases for the years ended October 31, 2023 and 2022 (in thousands): Year ended Year ended Cash paid for amounts included in the measurement of lease liabilities October 31, 2023 October 31, 2022 Operating cash flows for operating leases $ 7,043 $ 7,012 Financing cash flows for finance leases 1,793 1,683 Operating cash flows for finance leases 262 213 |
Schedule of undiscounted cash flows of operating lease | The following table reconciles the undiscounted cash flows for each of the first five years and total remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of October 31, 2023 (in thousands): Operating Finance Leases Leases 2024 $ 8,556 $ 1,909 2025 7,539 1,415 2026 7,058 1,137 2027 6,670 997 2028 6,501 748 Thereafter 23,204 2,235 Total lease payments 59,528 8,441 Less: imputed interest 7,073 1,190 Total lease liability $ 52,455 $ 7,251 |
Schedule of undiscounted cash flows of finance lease | Operating Finance Leases Leases 2024 $ 8,556 $ 1,909 2025 7,539 1,415 2026 7,058 1,137 2027 6,670 997 2028 6,501 748 Thereafter 23,204 2,235 Total lease payments 59,528 8,441 Less: imputed interest 7,073 1,190 Total lease liability $ 52,455 $ 7,251 |
Description of the business (De
Description of the business (Details) | 12 Months Ended |
Oct. 31, 2023 segment | |
Description of the business | |
Number of reportable segments | 2 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies - Presentation (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Significant Accounting Policies | ||
Restricted cash | $ 761 | $ 1,074 |
Prepaid expenses and other current assets | 13,934 | $ 8,868 |
New Credit Facility | ||
Significant Accounting Policies | ||
Restricted cash | 800 | |
Prepaid expenses and other current assets | $ 3,000 | |
Avocados de Jalisco | Avocados de Jalisco | ||
Significant Accounting Policies | ||
Subsidiary ownership (as a percent) | 83% |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - Prepaid (Details) - USD ($) $ in Millions | Oct. 31, 2023 | Oct. 31, 2022 |
Basis of Presentation and Significant Accounting Policies | ||
Non-trade receivables | $ 6.8 | $ 4.8 |
Mexican IVA | 2.7 | 1.8 |
Prepaid expenses | $ 4.8 | $ 3.1 |
Basis of Presentation and Sig_6
Basis of Presentation and Significant Accounting Policies - PPE and Goodwill (Details) | Oct. 31, 2023 |
Minimum | Buildings and improvements | |
Significant Accounting Policies | |
Property, Plant and Equipment, Useful Life | 7 years |
Minimum | Leasehold improvements | |
Significant Accounting Policies | |
Property, Plant and Equipment, Useful Life | 7 years |
Minimum | Equipment | |
Significant Accounting Policies | |
Property, Plant and Equipment, Useful Life | 7 years |
Minimum | Information systems - hardware and software | |
Significant Accounting Policies | |
Property, Plant and Equipment, Useful Life | 3 years |
Maximum | Buildings and improvements | |
Significant Accounting Policies | |
Property, Plant and Equipment, Useful Life | 50 years |
Maximum | Equipment | |
Significant Accounting Policies | |
Property, Plant and Equipment, Useful Life | 25 years |
Maximum | Information systems - hardware and software | |
Significant Accounting Policies | |
Property, Plant and Equipment, Useful Life | 10 years |
Basis of Presentation and Sig_7
Basis of Presentation and Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Basis of Presentation and Significant Accounting Policies | ||
Goodwill impairment | $ 0 | $ 0 |
Impairment of long-lived assets | $ 0 | $ 0 |
Basis of Presentation and Sig_8
Basis of Presentation and Significant Accounting Policies - Investments (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | Jul. 31, 2015 |
Significant Accounting Policies | ||||
Investments in unconsolidated entities | $ 2,902 | $ 3,782 | ||
Don Memo | Don Memo | Agricola Belher | ||||
Significant Accounting Policies | ||||
Ownership interest (as a percent) | 50% | |||
Equity method investment-Don Memo | ||||
Significant Accounting Policies | ||||
Investments in unconsolidated entities | $ 2,900 | $ 3,800 | $ 4,300 | |
Equity method investment-Don Memo | Don Memo | ||||
Significant Accounting Policies | ||||
Ownership interest (as a percent) | 50% |
Basis of Presentation and Sig_9
Basis of Presentation and Significant Accounting Policies - Suppliers Advances (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2020 |
Products | ||||
Advances to suppliers | $ 14,684 | $ 12,430 | ||
Equity method investment-Don Memo | ||||
Products | ||||
Commitment amount | $ 2,400 | |||
Advances to suppliers | 7,300 | 7,000 | $ 4,200 | |
Other related party | Agricola Belher | ||||
Products | ||||
Advances to suppliers | 5,400 | 4,500 | $ 4,500 | |
Other related party | Silvalber | ||||
Products | ||||
Advances to suppliers | $ 2,800 | $ 1,400 |
Basis of Presentation and Si_10
Basis of Presentation and Significant Accounting Policies - Infrastructure Advances (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Jul. 31, 2021 | Oct. 31, 2020 | Aug. 31, 2020 | Aug. 31, 2018 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2023 | Oct. 31, 2022 | Jan. 31, 2022 | |
Significant Accounting Policies | |||||||||
Non-cash settlement of advance | $ 928 | $ 1,060 | |||||||
Equity method investment-Don Memo | |||||||||
Significant Accounting Policies | |||||||||
Commitment amount | $ 2,400 | ||||||||
Loan receivable fixed interest rate (as a percent) | 7.25% | ||||||||
Amount loaned | $ 700 | $ 600 | $ 700 | ||||||
Loan to related parties | 1,600 | 1,600 | |||||||
Equity method investment-Don Memo | Prepaid expenses and other current assets | |||||||||
Significant Accounting Policies | |||||||||
Loan to related parties | 400 | ||||||||
Equity method investment-Don Memo | Other long-term assets | |||||||||
Significant Accounting Policies | |||||||||
Loan to related parties | 1,200 | ||||||||
Other related party | Agricola Belher | |||||||||
Significant Accounting Policies | |||||||||
Loan receivable fixed interest rate (as a percent) | 10% | 7.25% | |||||||
Amount loaned | $ 3,500 | $ 3,000 | |||||||
Annual repayment of advances | $ 900 | $ 600 | |||||||
Term of loans receivables | 2 years | ||||||||
Non-cash settlement of advance | 900 | 1,100 | |||||||
Expected payment on July 31, 2022 | $ 900 | ||||||||
Expected payment on July 31, 2023 | 900 | ||||||||
Expected payment on July 31, 2024 | $ 1,700 | ||||||||
Other related party | Agricola Belher | Prepaid expenses and other current assets | |||||||||
Significant Accounting Policies | |||||||||
Loan to related parties | $ 1,700 | 900 | |||||||
Other related party | Agricola Belher | Other long-term assets | |||||||||
Significant Accounting Policies | |||||||||
Loan to related parties | $ 1,700 | ||||||||
Other related party | Agricola Belher | LIBOR | |||||||||
Significant Accounting Policies | |||||||||
Advances variable interest rate (as a percent) | 10% |
Basis of Presentation and Si_11
Basis of Presentation and Significant Accounting Policies - Accrued Expenses (Details) - USD ($) $ in Millions | Oct. 31, 2023 | Oct. 31, 2022 |
Basis of Presentation and Significant Accounting Policies | ||
Accrued liabilities related to goods and services | $ 14.5 | $ 28.7 |
Basis of Presentation and Si_12
Basis of Presentation and Significant Accounting Policies - Revenue and Receivables (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Products | |||
Allowances of accounts receivable | $ 5,245 | $ 4,199 | |
Bridge loan to Agricola Belher | $ 1,700 | ||
Top Ten Customers | Customer concentration [Member] | Sales revenue [Member] | |||
Products | |||
Concentration of risk (as a percent) | 66% | 59% | 58% |
Kroger | Customer concentration [Member] | Sales revenue [Member] | |||
Products | |||
Concentration of risk (as a percent) | 17% | 15% | 16% |
Trader Joes | Customer concentration [Member] | Sales revenue [Member] | |||
Products | |||
Concentration of risk (as a percent) | 13% | 11% | |
Walmart | Customer concentration [Member] | Sales revenue [Member] | |||
Products | |||
Concentration of risk (as a percent) | 9% | 10% | 11% |
Basis of Presentation and Si_13
Basis of Presentation and Significant Accounting Policies - Consignments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Sales | $ 971,948 | $ 1,191,073 | $ 1,055,830 |
Cost of sales | 901,992 | 1,117,228 | 998,405 |
Gross profit | 69,956 | 73,845 | 57,425 |
Consignment Arrangements [Member] | |||
Sales | 56,811 | 59,748 | 52,287 |
Cost of sales | 51,937 | 53,238 | 45,945 |
Gross profit | $ 4,874 | $ 6,510 | $ 6,342 |
Basis of Presentation and Si_14
Basis of Presentation and Significant Accounting Policies - Advertising Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Basis of Presentation and Significant Accounting Policies | |||
Advertising costs | $ 0.4 | $ 0.6 | $ 0.4 |
Basis of Presentation and Si_15
Basis of Presentation and Significant Accounting Policies - Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Basis of Presentation and Significant Accounting Policies | |||
Research and development costs | $ 0.1 | $ 0.1 | $ 0.3 |
Investment Income, Dividend | 0 | 0.8 | $ 0.6 |
Consulting fees | 2.8 | ||
Employee costs | $ 5.5 | $ 2 |
Basis of Presentation and Si_16
Basis of Presentation and Significant Accounting Policies - EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Basis of Presentation and Significant Accounting Policies | |||
Net loss attributable to Calavo Growers, Inc. | $ (8,344) | $ (6,249) | $ (11,818) |
Weighted average shares - Basic (in shares) | 17,750,000 | 17,663,000 | 17,621,000 |
Weighted average shares - Diluted (in shares) | 17,750,000 | 17,663,000 | 17,621,000 |
Net loss - Basic (in dollars per shares) | $ (0.47) | $ (0.35) | $ (0.67) |
Net loss - Diluted (in dollars per shares) | $ (0.47) | $ (0.35) | $ (0.67) |
Antidilutive shares excluded from EPS (in shares) | 104,000 | 82,000 | 42,000 |
Basis of Presentation and Si_17
Basis of Presentation and Significant Accounting Policies - SBC (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Basis of Presentation and Significant Accounting Policies | |||
Stock-based compensation expense | $ 5.2 | $ 3.1 | $ 4 |
Basis of Presentation and Si_18
Basis of Presentation and Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Basis of Presentation and Significant Accounting Policies | |||
Foreign currency gains (losses) | $ (1.8) | $ 1 | $ (0.9) |
Fixed rate long term obligation fair value | $ 7.3 | $ 6 |
Basis of Presentation and Si_19
Basis of Presentation and Significant Accounting Policies - Noncontrolling Interest (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Basis of Presentation and Significant Accounting Policies | |||
Noncontrolling interest, beginning | $ 1,015 | $ 1,368 | |
Net loss attributable to noncontrolling interest of Avocados de Jalisco | 377 | (353) | $ (104) |
Noncontrolling interest, ending | $ 1,392 | $ 1,015 | $ 1,368 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Inventories | ||
Fresh fruit | $ 19,870 | $ 16,938 |
Packing supplies and ingredients | 9,438 | 14,176 |
Finished prepared foods | 10,122 | 7,716 |
Total inventories | $ 39,430 | $ 38,830 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Property, Plant and Equipment | |||
Property plant and equipment, Gross | $ 228,648 | $ 217,439 | |
Less accumulated depreciation and amortization | (115,919) | (104,129) | |
Total property, plant, and equipment, net | 112,729 | 113,310 | |
Depreciation expense | 13,800 | 15,000 | $ 14,500 |
Amortization financing lease assets | 1,913 | 1,756 | $ 1,800 |
Land | |||
Property, Plant and Equipment | |||
Property plant and equipment, Gross | 11,008 | 11,008 | |
Buildings and improvements | |||
Property, Plant and Equipment | |||
Property plant and equipment, Gross | 46,627 | 45,733 | |
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property plant and equipment, Gross | 21,524 | 19,030 | |
Equipment | |||
Property, Plant and Equipment | |||
Property plant and equipment, Gross | 127,876 | 121,441 | |
Information systems - hardware and software | |||
Property, Plant and Equipment | |||
Property plant and equipment, Gross | 14,767 | 11,920 | |
Construction in progress | |||
Property, Plant and Equipment | |||
Property plant and equipment, Gross | $ 6,846 | $ 8,307 |
Other assets and Intangibles -
Other assets and Intangibles - Other (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Goodwill and Intangible Assets | ||
Mexican IVA (i.e. value-added) taxes receivable | $ 49,888 | $ 43,625 |
Infrastructure advances | 1,641 | 1,241 |
Bridge loan to Agricola Belher | 1,700 | |
Other | 930 | 604 |
Total | $ 52,459 | $ 47,170 |
Other assets and Intangibles _2
Other assets and Intangibles - Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Finite-Lived and Infinite Intangible Assets | |||
Finite and indefinite lived intangible assets gross | $ 21,494 | $ 22,305 | |
Accum. Amortization | (15,796) | (15,099) | |
Intangibles, net | 5,698 | 7,206 | |
Amortization expense | 1,500 | 1,600 | $ 1,600 |
Brand name intangibles | |||
Finite-Lived and Infinite Intangible Assets | |||
Gross carrying value and net book value | $ 275 | 275 | |
Customer list/relationships | |||
Finite-Lived and Infinite Intangible Assets | |||
Weighted-Average Useful Life | 8 years | ||
Gross Carrying Value | $ 17,100 | 17,340 | |
Accum. Amortization | (12,517) | (11,373) | |
Net Book Value | $ 4,583 | 5,967 | |
Trade names | |||
Finite-Lived and Infinite Intangible Assets | |||
Weighted-Average Useful Life | 8 years | ||
Gross Carrying Value | $ 3,949 | 4,060 | |
Accum. Amortization | (3,109) | (3,100) | |
Net Book Value | $ 840 | 960 | |
Trade secrets/recipes | |||
Finite-Lived and Infinite Intangible Assets | |||
Weighted-Average Useful Life | 9 years | ||
Gross Carrying Value | $ 170 | 630 | |
Accum. Amortization | $ (170) | (626) | |
Net Book Value | $ 4 |
Other assets and Intangibles _3
Other assets and Intangibles - Amortization (Details) $ in Millions | Oct. 31, 2023 USD ($) |
Goodwill and Intangible Assets | |
Amortization expense for 2024 | $ 1.5 |
Amortization expense for 2025 | 1.5 |
Amortization expense for 2026 | 1.5 |
Amortization expense thereafter | $ 0.9 |
Revolving Credit Facilities (De
Revolving Credit Facilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 26, 2023 | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Debt | ||||
Proceeds from revolving credit facilities | $ 256,912 | $ 267,200 | $ 334,850 | |
Payments on revolving credit facilities | 223,089 | 303,700 | $ 317,700 | |
Restricted cash | 761 | $ 1,074 | ||
Revolving Credit Facility, Previous | ||||
Debt | ||||
Payments on revolving credit facilities | $ 34,900 | |||
Weighted average interest rate (as a percent) | 4.90% | |||
Borrowings pursuant to line of credit, long-term | $ 1,200 | |||
Letters of credit outstanding | $ 3,200 | |||
New Credit Facility | ||||
Debt | ||||
Remaining credit available | $ 40,000 | |||
Weighted average interest rate (as a percent) | 7.10% | |||
Restricted cash | $ 800 | |||
Restricted investments | 3,000 | |||
Revolving Loan | ||||
Debt | ||||
Credit available under borrowing agreement | 90,000 | |||
Proceeds from revolving credit facilities | $ 36,800 | |||
Applicable margin (as a percent) | 0.10% | |||
Floor rate (as a percent) | 0% | |||
Fixed charge coverage ratio | 10 | |||
Borrowings pursuant to line of credit, long-term | 35,000 | |||
Revolving Loan | Base Rate | ||||
Debt | ||||
Applicable margin (as a percent) | 0.50% | |||
Revolving Loan | SOFR | ||||
Debt | ||||
Applicable margin (as a percent) | 1.50% | |||
Term Loan-Capex Credit Facility | ||||
Debt | ||||
Credit available under borrowing agreement | $ 10,000 | |||
Credit agreement term | 1 year | |||
Term loan, current and non-current | $ 4,100 | |||
Term Loan-Capex Credit Facility | Base Rate | ||||
Debt | ||||
Applicable margin (as a percent) | 1% | |||
Term Loan-Capex Credit Facility | SOFR | ||||
Debt | ||||
Applicable margin (as a percent) | 2% |
Revolving Credit Facilities - M
Revolving Credit Facilities - Maturity (Details) - Term Loan-Capex Credit Facility $ in Millions | Oct. 31, 2023 USD ($) |
Debt | |
2024 | $ 0.6 |
2025 | 0.7 |
2026 | 0.7 |
2027 | 0.7 |
2028 | $ 1.4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands, $ in Millions | 12 Months Ended | |||||||||
Oct. 10, 2022 MXN ($) | Aug. 18, 2021 | Jul. 31, 2018 MXN ($) | Oct. 31, 2023 USD ($) | Oct. 31, 2022 USD ($) | Oct. 31, 2021 USD ($) | Oct. 31, 2023 MXN ($) | Jan. 31, 2023 MXN ($) | Jul. 31, 2021 USD ($) | Jun. 25, 2021 USD ($) | |
Commitments And Contingencies [Line Items] | ||||||||||
Settlement related fees | $ 3,128 | $ 1,417 | $ 1,797 | |||||||
Tax dispute liability accrued | 1,100 | $ 18 | ||||||||
Mexican Tax Authority | Tax Assessment 2013 | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Tax assessment | $ 3,100 | |||||||||
Settlement related fees | 2,400 | |||||||||
Fixed assets net book value under lien | $ 26,000 | |||||||||
Amount disputed | $ 2,600 | 143,800 | ||||||||
Bank accounts under lien | $ 1,000 | |||||||||
Percentage of tax on fruit purchase deposits | 16% | |||||||||
Tax dispute liability accrued | $ 11,000 | |||||||||
Estimate of loss | 166,000 | $ 3,000 | ||||||||
Mexican Tax Authority | Tax Assessment 2013 | Employee Profit Sharing Liability | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Estimate of loss | $ 6,500 | $ 118 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Jul. 31, 2021 | Oct. 31, 2020 | Aug. 31, 2020 | Aug. 31, 2018 | Jul. 31, 2015 | Apr. 30, 2021 | Jan. 31, 2021 | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | Jan. 31, 2022 | |
Related-Party Transactions | |||||||||||
Dividend income from Limoneira | $ 0 | $ 800 | $ 600 | ||||||||
Equity securities gain (loss) | (8,605) | 3,858 | |||||||||
Gross proceeds for common stock | 18,450 | ||||||||||
Investments in unconsolidated entities | 2,902 | 3,782 | |||||||||
Advances to suppliers | 1,326 | 4,677 | 1,632 | ||||||||
Advances to suppliers | 14,684 | 12,430 | |||||||||
Non-cash settlement of advance | 928 | 1,060 | |||||||||
Don Memo | Agricola Belher | Don Memo | |||||||||||
Related-Party Transactions | |||||||||||
Ownership interest (as a percent) | 50% | ||||||||||
Directors | |||||||||||
Related-Party Transactions | |||||||||||
Purchases from related parties | 2,700 | 7,500 | 17,800 | ||||||||
Accounts payable to related parties | 0 | 0 | |||||||||
Chief Executive Officer | |||||||||||
Related-Party Transactions | |||||||||||
Purchases from related parties | 3,100 | ||||||||||
Equity method investment-Don Memo | |||||||||||
Related-Party Transactions | |||||||||||
Purchases from related parties | 15,800 | 13,700 | 14,700 | ||||||||
Investment in FreshRealm | $ 2,000 | ||||||||||
Investments in unconsolidated entities | 2,900 | 3,800 | 4,300 | ||||||||
Amount loaned | $ 700 | $ 600 | $ 700 | ||||||||
Advances to suppliers | 2,800 | ||||||||||
Advances to suppliers | 7,300 | 7,000 | 4,200 | ||||||||
Loan receivable fixed interest rate (as a percent) | 7.25% | ||||||||||
Commitment amount | $ 2,400 | ||||||||||
Loan to related parties | 1,600 | 1,600 | |||||||||
Tomato liability due to related party | $ 1,500 | 1,900 | 3,000 | ||||||||
Equity method investment-Don Memo | Prepaid expenses and other current assets | |||||||||||
Related-Party Transactions | |||||||||||
Loan to related parties | 400 | ||||||||||
Equity method investment-Don Memo | Other long-term assets | |||||||||||
Related-Party Transactions | |||||||||||
Loan to related parties | 1,200 | ||||||||||
Equity method investment-Don Memo | Don Memo | |||||||||||
Related-Party Transactions | |||||||||||
Ownership interest (as a percent) | 50% | ||||||||||
Other related party | Agricola Belher | |||||||||||
Related-Party Transactions | |||||||||||
Purchases from related parties | $ 16,200 | 19,400 | 16,300 | ||||||||
Amount loaned | $ 3,500 | $ 3,000 | |||||||||
Advances to suppliers | 5,400 | 4,500 | 4,500 | ||||||||
Annual repayment of advances | $ 900 | $ 600 | |||||||||
Loan receivable fixed interest rate (as a percent) | 10% | 7.25% | |||||||||
Term of loans receivables | 2 years | ||||||||||
Expected payment on July 31, 2022 | $ 900 | ||||||||||
Expected payment on July 31, 2023 | 900 | ||||||||||
Expected payment on July 31, 2024 | $ 1,700 | ||||||||||
Non-cash settlement of advance | 900 | 1,100 | |||||||||
Other related party | Agricola Belher | LIBOR | |||||||||||
Related-Party Transactions | |||||||||||
Advances variable interest rate (as a percent) | 10% | ||||||||||
Other related party | Agricola Belher | Prepaid expenses and other current assets | |||||||||||
Related-Party Transactions | |||||||||||
Loan to related parties | 1,700 | 900 | |||||||||
Other related party | Agricola Belher | Other long-term assets | |||||||||||
Related-Party Transactions | |||||||||||
Loan to related parties | 1,700 | ||||||||||
Subsidiary-Avocados de Jalisco | |||||||||||
Related-Party Transactions | |||||||||||
Purchases from related parties | $ 8,100 | $ 7,000 | $ 13,000 | ||||||||
Subsidiary-Avocados de Jalisco | Avocados de Jalisco | |||||||||||
Related-Party Transactions | |||||||||||
Subsidiary ownership (as a percent) | 83% |
Income Taxes - Provision (Benef
Income Taxes - Provision (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Current: | |||
Federal | $ (387) | $ 2,012 | $ (3,449) |
State | 280 | 147 | 323 |
Foreign | 1,143 | 1,209 | 16,703 |
Total current | 1,036 | 3,368 | 13,577 |
Deferred: | |||
Federal | (468) | (162) | 790 |
State | (337) | 746 | (343) |
Foreign | 2,656 | (701) | (3,934) |
Total deferred | 1,851 | (117) | (3,487) |
Change in valuation allowance | 3,055 | 657 | |
Total income tax provision | $ 5,942 | $ 3,251 | $ 10,747 |
Income Taxes - Components of lo
Income Taxes - Components of loss (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Income Taxes | ||||
Domestic | $ (8,741) | $ (1,411) | $ (4,959) | |
Foreign | 6,716 | (1,940) | 3,784 | |
Income (loss) before taxes, including net loss from unconsolidated entities | (2,025) | (3,351) | (1,175) | |
Net loss from unconsolidated entities | $ (879) | (564) | $ (1,719) | |
Income tax refunds | $ 2,800 | $ 6,700 |
Income Taxes - Deferred Taxes (
Income Taxes - Deferred Taxes (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Income Taxes | ||
Intangible assets | $ 941 | $ 2,828 |
Stock-based compensation | 316 | 715 |
State taxes | 7 | 6 |
Allowance for accounts receivable | 1,276 | 936 |
Inventories | 591 | 442 |
Accrued liabilities | 2,238 | 1,143 |
Operating lease liabilities | 14,444 | 14,861 |
Net operating loss | 4,109 | 549 |
Capital loss carryover | 806 | 804 |
Credits and incentives | 1,099 | 1,194 |
Total deferred income tax assets | 25,827 | 23,478 |
Property, plant, and equipment | (6,340) | (2,002) |
Operating lease - Right of use assets | (12,111) | (13,723) |
Other | (227) | (490) |
Total deferred income tax liabilities | (18,678) | (16,215) |
Valuation allowance | (4,885) | (1,830) |
Net deferred income tax assets | $ 2,264 | $ 5,433 |
Income Taxes - Net Deferred (De
Income Taxes - Net Deferred (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Income Taxes | ||
Deferred income tax assets | $ 3,010 | $ 5,433 |
Deferred income tax liabilities | (746) | |
Net deferred income tax assets | $ 2,264 | $ 5,433 |
Income Taxes - Carryforward (De
Income Taxes - Carryforward (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Valuation allowance | ||
Valuation allowance | $ 4,885 | $ 1,830 |
Change in valuation allowance | 3,100 | 600 |
State | ||
Valuation allowance | ||
Operating loss carryforwards | 13,400 | $ 9,100 |
Federal | ||
Valuation allowance | ||
Operating loss carryforwards | $ 6,600 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Effective tax rate reconciliation (as a percent) | |||
Federal statutory tax rate | 21% | 21% | 21% |
State taxes, net of federal effects | 0.90% | (1.30%) | 11.60% |
Rate differential on NOL carryback | 125.80% | ||
Foreign tax rate differential | (29.80%) | 5.20% | 16.10% |
Uncertain tax positions | 5.10% | (1059.90%) | |
Stock based compensation | (26.30%) | (6.10%) | (16.70%) |
Provision to return | (12.30%) | (59.90%) | 39.20% |
US tax on foreign income, net | (15.80%) | ||
State rate change | 0.90% | (2.50%) | 9.20% |
Valuation allowance | (150.70%) | (24.20%) | (44.10%) |
Limits on executive compensation | (21.60%) | ||
Other permanent differences | (19.10%) | (33.80%) | |
Other | (40.60%) | (0.50%) | (15.50%) |
Effective income tax rate | (293.40%) | (97.00%) | (913.30%) |
Income Taxes - Unrecognized (De
Income Taxes - Unrecognized (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Reconciliation of gross unrecognized taxes | ||
Beginning balance | $ 11,131 | $ 11,303 |
Reductions based on tax positions related to prior periods | (172) | |
Gross increase - Tax positions in prior periods | 0 | 0 |
Ending balance | 11,131 | $ 11,131 |
Accrued interest and penalties | $ 0 |
Segment Information - Gross Pro
Segment Information - Gross Profit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Segment reporting information | |||
Net sales | $ 971,948 | $ 1,191,073 | $ 1,055,830 |
Cost of sales | 901,992 | 1,117,228 | 998,405 |
Gross profit | 69,956 | 73,845 | 57,425 |
Grown | |||
Segment reporting information | |||
Net sales | 527,396 | 698,205 | 586,030 |
Prepared | |||
Segment reporting information | |||
Net sales | 444,552 | 492,868 | 469,800 |
Operating segments | Grown | |||
Segment reporting information | |||
Net sales | 529,025 | 700,270 | |
Cost of sales | 476,862 | 650,105 | |
Gross profit | 52,163 | 50,165 | |
Operating segments | Prepared | |||
Segment reporting information | |||
Net sales | 444,552 | 492,868 | |
Cost of sales | 426,759 | 469,188 | |
Gross profit | 17,793 | 23,680 | |
Intersegment Eliminations | |||
Segment reporting information | |||
Net sales | (1,629) | (2,065) | (2,497) |
Cost of sales | (1,629) | (2,065) | |
Intersegment Eliminations | Grown | |||
Segment reporting information | |||
Net sales | (1,629) | (2,065) | (2,497) |
Intersegment Eliminations | Prepared | |||
Segment reporting information | |||
Net sales | $ 0 | $ 0 | $ 0 |
Segment Information - Product (
Segment Information - Product (Details) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 USD ($) segment | Oct. 31, 2022 USD ($) | Oct. 31, 2021 USD ($) | |
Segment reporting information | |||
Number of reportable segments | segment | 2 | ||
Net sales | $ 971,948 | $ 1,191,073 | $ 1,055,830 |
Goodwill | 28,653 | 28,653 | |
Grown | |||
Segment reporting information | |||
Net sales | 527,396 | 698,205 | 586,030 |
Goodwill | 4,000 | 4,000 | |
Prepared | |||
Segment reporting information | |||
Net sales | 444,552 | 492,868 | 469,800 |
Goodwill | 24,700 | 24,700 | |
Operating segments | |||
Segment reporting information | |||
Total gross sales | 987,650 | 1,207,768 | 1,073,686 |
Less sales allowances | (14,073) | (14,630) | (15,359) |
Operating segments | Avocados | |||
Segment reporting information | |||
Total gross sales | 466,385 | 645,944 | 536,969 |
Operating segments | Tomatoes | |||
Segment reporting information | |||
Total gross sales | 56,298 | 47,288 | 43,658 |
Operating segments | Papayas | |||
Segment reporting information | |||
Total gross sales | 10,432 | 11,422 | 10,884 |
Operating segments | Other fresh income | |||
Segment reporting information | |||
Total gross sales | 100 | 123 | 693 |
Operating segments | Fresh-cut fruit | |||
Segment reporting information | |||
Total gross sales | 383,028 | 426,161 | 403,017 |
Operating segments | Guacamole | |||
Segment reporting information | |||
Total gross sales | 70,611 | 74,970 | 75,681 |
Operating segments | Salsa | |||
Segment reporting information | |||
Total gross sales | 796 | 1,860 | 2,784 |
Operating segments | Grown | |||
Segment reporting information | |||
Total gross sales | 533,215 | 704,777 | 592,204 |
Less sales allowances | (4,190) | (4,507) | (3,677) |
Net sales | 529,025 | 700,270 | |
Operating segments | Grown | Avocados | |||
Segment reporting information | |||
Total gross sales | 466,385 | 645,944 | 536,969 |
Operating segments | Grown | Tomatoes | |||
Segment reporting information | |||
Total gross sales | 56,298 | 47,288 | 43,658 |
Operating segments | Grown | Papayas | |||
Segment reporting information | |||
Total gross sales | 10,432 | 11,422 | 10,884 |
Operating segments | Grown | Other fresh income | |||
Segment reporting information | |||
Total gross sales | 100 | 123 | 693 |
Operating segments | Prepared | |||
Segment reporting information | |||
Total gross sales | 454,435 | 502,991 | 481,482 |
Less sales allowances | (9,883) | (10,123) | (11,682) |
Net sales | 444,552 | 492,868 | |
Operating segments | Prepared | Fresh-cut fruit | |||
Segment reporting information | |||
Total gross sales | 383,028 | 426,161 | 403,017 |
Operating segments | Prepared | Guacamole | |||
Segment reporting information | |||
Total gross sales | 70,611 | 74,970 | 75,681 |
Operating segments | Prepared | Salsa | |||
Segment reporting information | |||
Total gross sales | 796 | 1,860 | 2,784 |
Intersegment Eliminations | |||
Segment reporting information | |||
Net sales | (1,629) | (2,065) | (2,497) |
Intersegment Eliminations | Grown | |||
Segment reporting information | |||
Net sales | (1,629) | (2,065) | (2,497) |
Intersegment Eliminations | Prepared | |||
Segment reporting information | |||
Net sales | $ 0 | $ 0 | $ 0 |
Segment Information - Geographi
Segment Information - Geographic (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Segment reporting information | |||
Net sales | $ 971,948 | $ 1,191,073 | $ 1,055,830 |
Long-lived assets | 112,729 | 113,310 | |
Outside United States | |||
Segment reporting information | |||
Net sales | 34,600 | 27,800 | $ 34,800 |
United States | |||
Segment reporting information | |||
Long-lived assets | 77,791 | 77,208 | |
Mexico | |||
Segment reporting information | |||
Long-lived assets | $ 34,938 | $ 36,102 |
Long-Term Obligations - Summary
Long-Term Obligations - Summary (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Long-Term Obligations | ||
Finance leases | $ 7,251 | $ 6,021 |
Less current portion | (1,604) | (1,574) |
Finance lease liability, noncurrent | $ 5,647 | $ 4,447 |
Stock-Based Compensation - Gene
Stock-Based Compensation - General (Details) - 2020 Management Incentive Plan | 1 Months Ended |
Apr. 30, 2021 shares | |
Share-based Compensation | |
Award expiration period | 5 years |
Common stock shares authorized (in shares) | 1,500,000 |
Stock-Based Compensation - Non-
Stock-Based Compensation - Non-options (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
Nov. 01, 2023 | Mar. 07, 2023 | Dec. 22, 2022 | Dec. 01, 2022 | Nov. 03, 2022 | Jun. 30, 2023 | Apr. 30, 2023 | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Share-based Compensation | ||||||||||
Stock-based compensation expense | $ 5,200,000 | $ 3,100,000 | $ 4,000,000 | |||||||
Restricted stock | ||||||||||
Share-based Compensation | ||||||||||
Stock closing price awarded (in dollars per share) | $ 34.13 | |||||||||
Stock-based compensation expense | $ 2,300,000 | $ 2,300,000 | ||||||||
Outstanding (in shares), Beginning Balance | 29,000 | 67,000 | ||||||||
Granted (in shares) | 38,000 | |||||||||
Vested (in shares) | (72,000) | |||||||||
Forfeited (in shares) | (4,000) | |||||||||
Outstanding (in shares), Ending Balance | 29,000 | 67,000 | ||||||||
Outstanding, Weighted-Average Exercise Price, beginning balance | $ 35.24 | $ 45.01 | ||||||||
Granted, Weighted-Average Grant Price | 34.13 | |||||||||
Vested, Weighted-Average Grant Price | 41.85 | |||||||||
Forfeited, Weighted-Average Grant Price | 37.85 | |||||||||
Outstanding, Weighted-Average Exercise Price, ending balance | $ 35.24 | $ 45.01 | ||||||||
Aggregate Intrinsic Value | $ 747,000 | |||||||||
Unrecognized stock based compensation expenses | $ 100,000 | |||||||||
Unrecognized compensation cost period | 3 months 18 days | |||||||||
Restricted stock | Former CEO | ||||||||||
Share-based Compensation | ||||||||||
Shares granted value | $ 100,000 | |||||||||
Stock closing price awarded (in dollars per share) | $ 30.12 | |||||||||
Stock-based compensation expense | $ 800,000 | |||||||||
Granted (in shares) | 3,321 | |||||||||
Vested (in shares) | (19,329) | |||||||||
Granted, Weighted-Average Grant Price | $ 30.12 | |||||||||
Restricted stock | Directors | ||||||||||
Share-based Compensation | ||||||||||
Stock closing price awarded (in dollars per share) | $ 24.35 | $ 34.51 | ||||||||
Stock-based compensation expense | 1,100,000 | |||||||||
Granted (in shares) | 4,929 | 3,478 | ||||||||
Vested (in shares) | (27,824) | (1,678) | ||||||||
Forfeited (in shares) | (1,800) | |||||||||
Granted, Weighted-Average Grant Price | $ 24.35 | $ 34.51 | ||||||||
Restricted stock | Directors | Aggregate | ||||||||||
Share-based Compensation | ||||||||||
Granted (in shares) | 39,432 | 34,780 | ||||||||
Vested (in shares) | (3,356) | |||||||||
Forfeited (in shares) | (3,600) | |||||||||
RSU and PRSU | ||||||||||
Share-based Compensation | ||||||||||
Stock closing price awarded (in dollars per share) | $ 34.51 | |||||||||
Granted, Weighted-Average Grant Price | $ 34.51 | |||||||||
RSU and PRSU | Former CEO | ||||||||||
Share-based Compensation | ||||||||||
Accelerated stock-based compensation expense | $ 500,000 | |||||||||
RSU | ||||||||||
Share-based Compensation | ||||||||||
Stock closing price awarded (in dollars per share) | $ 34.46 | |||||||||
Stock-based compensation expense | $ 1,600,000 | $ 700,000 | ||||||||
Vesting period | 3 years | |||||||||
Outstanding (in shares), Beginning Balance | 51,000 | 52,000 | ||||||||
Granted (in shares) | 66,325 | 68,000 | ||||||||
Vested (in shares) | (32,000) | |||||||||
Forfeited (in shares) | (37,000) | |||||||||
Outstanding (in shares), Ending Balance | 51,000 | 52,000 | ||||||||
Outstanding, Weighted-Average Exercise Price, beginning balance | $ 35.36 | $ 39.17 | ||||||||
Granted, Weighted-Average Grant Price | 34.46 | |||||||||
Vested, Weighted-Average Grant Price | 39.25 | |||||||||
Forfeited, Weighted-Average Grant Price | 35.65 | |||||||||
Outstanding, Weighted-Average Exercise Price, ending balance | $ 35.36 | $ 39.17 | ||||||||
Aggregate Intrinsic Value | $ 1,284,000 | |||||||||
Unrecognized stock based compensation expenses | $ 1,200,000 | |||||||||
Unrecognized compensation cost period | 1 year 9 months 18 days | |||||||||
RSU | Former CEO | ||||||||||
Share-based Compensation | ||||||||||
Vested (in shares) | (7,421) | |||||||||
Forfeited (in shares) | (11,285) | |||||||||
RSU | Former Officers [Member] | ||||||||||
Share-based Compensation | ||||||||||
Accelerated stock-based compensation expense | $ 300,000 | |||||||||
Vested (in shares) | (10,311) | |||||||||
Forfeited (in shares) | (6,123) | |||||||||
PRSU | ||||||||||
Share-based Compensation | ||||||||||
Stock closing price awarded (in dollars per share) | $ 34.51 | |||||||||
Stock-based compensation expense | $ 200,000 | $ 100,000 | ||||||||
Vesting period | 3 years | |||||||||
Outstanding (in shares), Beginning Balance | 31,000 | |||||||||
Granted (in shares) | 66,325 | 66,000 | ||||||||
Vested (in shares) | (14,000) | |||||||||
Forfeited (in shares) | (33,000) | |||||||||
Adjusted for performance factor (in shares) | (50,000) | |||||||||
Outstanding (in shares), Ending Balance | 31,000 | |||||||||
Outstanding, Weighted-Average Exercise Price, beginning balance | $ 37.49 | |||||||||
Granted, Weighted-Average Grant Price | 34.51 | |||||||||
Vested, Weighted-Average Grant Price | 35.65 | |||||||||
Forfeited, Weighted-Average Grant Price | 35.35 | |||||||||
Adjusted for performance factor, Weighted-Average Grant Price | $ 35.22 | |||||||||
Outstanding, Weighted-Average Exercise Price, ending balance | $ 37.49 | |||||||||
Increase (decrease) deferred compensation reversal | $ 300,000 | |||||||||
PRSU | Former CEO | ||||||||||
Share-based Compensation | ||||||||||
Vested (in shares) | (13,687) | |||||||||
Forfeited (in shares) | (8,574) | |||||||||
PRSU | Former Officers [Member] | ||||||||||
Share-based Compensation | ||||||||||
Forfeited (in shares) | (6,123) |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 USD ($) D $ / shares shares | Oct. 31, 2023 USD ($) $ / shares shares | Oct. 31, 2022 USD ($) $ / shares shares | Oct. 31, 2021 USD ($) | |
Share-based Compensation | ||||
Outstanding, Number of Shares, Beginning Balance | 27,000 | |||
Exercised, Number of Shares | (2,000) | |||
Granted, Number of Shares | 500,000 | |||
Outstanding, Number of Shares, Ending Balance | 525,000 | 27,000 | ||
Exercisable, Number of Shares | 17,000 | |||
Outstanding, Weighted-Average Exercise Price | $ / shares | $ 44.67 | |||
Exercised, Weighted-Average Exercise Price | $ / shares | 23.48 | |||
Granted, Weighted-Average Exercise Price | $ / shares | 24.39 | |||
Outstanding, Weighted-Average Exercise Price, ending balance | $ / shares | 25.44 | $ 44.67 | ||
Exercisable, Weighted-Average Exercise Price | $ / shares | $ 49.52 | |||
Outstanding, Aggregate Intrinsic Value | $ | $ 475 | |||
Stock-based compensation expense | $ | 5,200 | $ 3,100 | $ 4,000 | |
Chief Executive Officer | ||||
Share-based Compensation | ||||
Granted, Number of Shares | 500,000 | |||
Outstanding, Aggregate Intrinsic Value | $ | $ 1,800 | |||
Chief Executive Officer | Tranche One | ||||
Share-based Compensation | ||||
Granted, Number of Shares | 200,000 | |||
Chief Executive Officer | Tranche Two | ||||
Share-based Compensation | ||||
Threshold trading days | D | 30 | |||
Granted, Number of Shares | 100,000 | |||
Chief Executive Officer | Tranche Two | Minimum | ||||
Share-based Compensation | ||||
Target share price | $ / shares | $ 50 | |||
Chief Executive Officer | Tranche Three | ||||
Share-based Compensation | ||||
Threshold trading days | D | 30 | |||
Granted, Number of Shares | 100,000 | |||
Chief Executive Officer | Tranche Three | Minimum | ||||
Share-based Compensation | ||||
Target share price | $ / shares | $ 60 | |||
Chief Executive Officer | Tranche Four | ||||
Share-based Compensation | ||||
Threshold trading days | D | 30 | |||
Granted, Number of Shares | 100,000 | |||
Chief Executive Officer | Tranche Four | Minimum | ||||
Share-based Compensation | ||||
Target share price | $ / shares | $ 70 | |||
Employee Stock Option [Member] | ||||
Share-based Compensation | ||||
Stock-based compensation expense | $ | 1,300 | |||
Unrecognized stock based compensation expenses | $ | $ 700 | |||
Unrecognized compensation cost period | 4 months 24 days | |||
Employee Stock Option [Member] | Minimum | ||||
Share-based Compensation | ||||
Vesting period | 1 year | |||
Award expiration period | 2 years | |||
Employee Stock Option [Member] | Maximum | ||||
Share-based Compensation | ||||
Vesting period | 5 years | |||
Award expiration period | 5 years |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Input (Details) - Employee Stock Option [Member] - Chief Executive Officer | 1 Months Ended |
Mar. 31, 2023 | |
Risk-free interest rate | 4.31% |
Expected volatility | 35% |
Dividend yield | 1.60% |
Expected life (years) | 3 years |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||||
Sep. 01, 2023 | Jul. 11, 2023 | Apr. 06, 2023 | Dec. 14, 2022 | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Dividends | |||||||
Dividend paid (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.2875 | $ 0.4875 | $ 1.15 | |
Dividend amount paid to shareholders | $ 1,800 | $ 1,700 | $ 5,200 | $ 10,433 | $ 20,330 | $ 20,343 |
Mexican IVA taxes receivable (D
Mexican IVA taxes receivable (Details) $ in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2023 USD ($) | Oct. 31, 2023 USD ($) | Oct. 31, 2022 USD ($) | Oct. 31, 2023 MXN ($) | Jan. 31, 2023 MXN ($) | Oct. 31, 2022 MXN ($) | Apr. 30, 2022 USD ($) | Apr. 30, 2022 MXN ($) | |
IVA receivables | ||||||||
IVA receivables balance | $ 49.9 | $ 43.6 | $ 913.6 | $ 865.4 | ||||
Unrecoverable value added tax | 0.4 | $ 6.9 | $ 0.4 | $ 6.9 | ||||
Tax refund from SAT | 1.1 | $ 18 | ||||||
Receivable reserve | 1.4 | |||||||
Income tax refunds | $ 2.8 | $ 6.7 | ||||||
Interest proceeds | $ 1.7 | |||||||
Receivable recovery | $ 1.1 |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2020 |
Leases | ||||
Operating lease liability | $ 52,455 | |||
Other long-term liabilities | 4,653 | $ 2,635 | ||
Total shareholders' equity | 210,229 | 223,371 | $ 226,883 | $ 256,002 |
Lease-related assets and liabilities | ||||
Operating lease assets | 48,033 | 54,518 | ||
Finance lease asset | $ 6,777 | $ 5,721 | ||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant, and Equipment and Finance Lease Right-of-Use Asset, after Accumulated Depreciation and Amortization | Property, Plant, and Equipment and Finance Lease Right-of-Use Asset, after Accumulated Depreciation and Amortization | ||
Total | $ 54,810 | $ 60,239 | ||
Current portion of operating leases | 7,062 | 6,925 | ||
Finance lease liability, current | 1,604 | 1,574 | ||
Long-term portion of operating leases | 45,393 | 52,140 | ||
Finance lease liability, noncurrent | 5,647 | 4,447 | ||
Total | $ 59,706 | $ 65,086 | ||
Weighted-average remaining lease term: Operating leases | 8 years 2 months 12 days | 9 years 3 months 18 days | ||
Weighted-average remaining lease term: Finance leases | 6 years 6 months | 6 years 10 months 24 days | ||
Weighted-average discount rate: Operating leases | 3.10% | 2.87% | ||
Weighted-average discount rate: Finance leases | 4.83% | 3.62% |
Leases - Costs and Other Inform
Leases - Costs and Other Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Lease costs | |||
Amortization of financing lease assets (recorded in cost of sales) | $ 1,913 | $ 1,756 | $ 1,800 |
Operating lease cost | 8,511 | 8,733 | |
Short-term lease cost | 2,476 | 2,483 | |
Sublease income | (30) | ||
Variable lease cost | 198 | 133 | |
Interest on financing lease liabilities | 273 | 213 | |
Total lease cost | 13,371 | 13,288 | |
Operating cash flows for operating leases | 7,043 | 7,012 | |
Financing cash flows for finance leases | 1,793 | 1,683 | |
Operating cash flows for finance leases | 262 | 213 | |
Right of use assets obtained for operating lease | $ 700 | $ 1,000 |
Leases - Undiscounted Future Pa
Leases - Undiscounted Future Payments (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Oct. 31, 2022 |
Operating Leases | ||
2024 | $ 8,556 | |
2025 | 7,539 | |
2026 | 7,058 | |
2027 | 6,670 | |
2028 | 6,501 | |
Thereafter | 23,204 | |
Total lease payments | 59,528 | |
Less: imputed interest | 7,073 | |
Operating lease liability | 52,455 | |
Finance Leases | ||
2024 | 1,909 | |
2025 | 1,415 | |
2026 | 1,137 | |
2027 | 997 | |
2028 | 748 | |
Thereafter | 2,235 | |
Total lease payments | 8,441 | |
Less: imputed interest | 1,190 | |
Finance lease liability | $ 7,251 | $ 6,021 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2023 | Oct. 31, 2022 | Oct. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ (8,344) | $ (6,249) | $ (11,818) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Oct. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |