Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jan. 31, 2024 | Feb. 28, 2024 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 31, 2024 | |
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, $0.001 par value per share | |
Trading Symbol | CVGW | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,800,265 | |
Entity Central Index Key | 0001133470 | |
Current Fiscal Year End Date | --10-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jan. 31, 2024 | Oct. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 5,658 | $ 2,091 |
Restricted cash | 761 | |
Accounts receivable, net of allowances of $3,591 (2024) and $3,364 (2023) | 35,158 | 33,897 |
Inventories | 39,551 | 31,571 |
Prepaid expenses and other current assets | 10,256 | 11,739 |
Advances to suppliers | 13,409 | 14,684 |
Current assets held for sale | 140,671 | 37,533 |
Income taxes receivable | 894 | 1,094 |
Total current assets | 245,597 | 133,370 |
Property, plant, and equipment, net | 59,206 | 60,924 |
Operating lease right-of-use assets | 17,507 | 18,357 |
Investments in unconsolidated entities | 2,903 | 2,902 |
Deferred income tax assets | 3,010 | 3,010 |
Goodwill | 10,211 | 10,211 |
Non-current assets held for sale | 105,424 | |
Intangibles, net | 275 | 275 |
Other assets | 55,974 | 52,381 |
Total assets | 394,683 | 386,854 |
Current liabilities: | ||
Payable to growers | 21,964 | 14,788 |
Trade accounts payable | 4,916 | 5,097 |
Accrued expenses | 20,582 | 15,809 |
Current liabilities held for sale | 57,222 | 29,911 |
Other current liabilities | 11,000 | 11,000 |
Current portion of term loan | 792 | 647 |
Current portion of operating leases | 3,585 | 3,663 |
Current portion of long-term obligations and finance leases | 834 | 831 |
Total current liabilities | 120,895 | 81,746 |
Long-term liabilities: | ||
Borrowings pursuant to line of credit, long-term | 41,677 | 35,024 |
Long-term liabilities held for sale | 29,295 | |
Long-term portion of term loan | 3,213 | 3,416 |
Long-term portion of operating leases | 16,488 | 17,328 |
Long-term portion of obligations and finance leases | 4,478 | 4,645 |
Deferred income tax liabilities | 746 | 746 |
Other long-term liabilities | 4,653 | 4,425 |
Total long-term liabilities | 71,255 | 94,879 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock ($0.001 par value, 100,000 shares authorized; 17,800 (2024) and 17,761 (2023) shares issued and outstanding) | 18 | 18 |
Additional paid-in capital | 176,823 | 176,481 |
Noncontrolling interest | 1,402 | 1,392 |
Retained earnings | 24,290 | 32,338 |
Total shareholders' equity | 202,533 | 210,229 |
Total liabilities and shareholders' equity | $ 394,683 | $ 386,854 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jan. 31, 2024 | Oct. 31, 2023 |
CONSOLIDATED BALANCE SHEETS | ||
Allowances of accounts receivable | $ 3,591 | $ 3,364 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 17,800 | 17,761 |
Common stock, shares outstanding | 17,800 | 17,761 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net sales | $ 127,606 | $ 132,763 |
Cost of sales | 115,138 | 119,678 |
Gross profit | 12,468 | 13,085 |
Selling, general and administrative | 13,463 | 11,642 |
Expenses related to Mexican tax matters | 383 | 2,048 |
Operating loss | (1,378) | (605) |
Interest expense | (824) | (377) |
Other income, net | 200 | 340 |
Loss before income taxes and loss from unconsolidated entities | (2,002) | (642) |
Income tax benefit (expense) | (573) | 41 |
Net income from unconsolidated entities | 1 | 156 |
Net loss from continuing operations | (2,574) | (445) |
Net loss from discontinued operations | (3,683) | (2,350) |
Net loss | (6,257) | (2,795) |
Add: Net income attributable to noncontrolling interest | (10) | (273) |
Net loss attributable to Calavo Growers, Inc. | $ (6,267) | $ (3,068) |
Earnings Per Share, Basic | ||
Basic, Continuing Operations (in dollars per shares) | $ (0.15) | $ (0.04) |
Basic, Discontinued Operations (in dollars per shares) | (0.21) | (0.13) |
Net loss attributable to Calavo Growers, Inc(in dollar per share) | (0.35) | (0.17) |
Earnings Per Share, Diluted | ||
Diluted, Continuing Operations (in dollars per shares) | (0.15) | (0.04) |
Diluted, Discontinued Operations (in dollars per shares) | (0.21) | (0.13) |
Net loss attributable to Calavo Growers, Inc(in dollar per share) | $ (0.35) | $ (0.17) |
Number of shares used in per share computation: | ||
Basic | 17,799 | 17,673 |
Diluted | 17,799 | 17,673 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (6,257) | $ (2,795) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 4,555 | 4,166 |
Non-cash operating lease expense | 14 | 52 |
Net income from unconsolidated entities | (1) | (156) |
Provision for uncollectible Mexican IVA taxes receivable | 165 | 1,404 |
Stock-based compensation expense | 941 | 1,253 |
Gain on sale of Temecula packinghouse | (54) | (54) |
Effect on cash of changes in operating assets and liabilities: | ||
Accounts receivable, net | (1,645) | (3,217) |
Inventories | (7,870) | (5,262) |
Prepaid expenses and other current assets | 1,313 | (2,050) |
Advances to suppliers | 1,388 | 2,676 |
Income taxes receivable/payable | 200 | (721) |
Other assets | (3,758) | (4,094) |
Payable to growers | 7,176 | (4,104) |
Trade accounts payable, accrued expenses and other liabilities | 3,891 | 7,026 |
Net cash provided by (used in) operating activities | 58 | (5,876) |
Cash Flows from Investing Activities: | ||
Purchases of property, plant, and equipment | (1,030) | (5,185) |
Net cash used in investing activities | (1,030) | (5,185) |
Cash Flows from Financing Activities: | ||
Payment of dividend to shareholders | (1,781) | (5,102) |
Proceeds from revolving credit facilities | 29,200 | 64,500 |
Payments on revolving credit facilities | (22,547) | (49,300) |
Payments of minimum withholding taxes on net share settlement of equity awards | (599) | |
Payments on term loan | (58) | |
Payments on long-term obligations and finance leases | (437) | (422) |
Proceeds from stock option exercises | 48 | |
Net cash provided by financing activities | 3,778 | 9,724 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,806 | (1,337) |
Cash, cash equivalents and restricted cash, beginning of period | 2,852 | 3,134 |
Cash, cash equivalents and restricted cash, end of period | 5,658 | 1,797 |
Noncash Investing and Financing Activities: | ||
Right of use assets obtained in exchange for new financing lease obligations | 135 | 1,097 |
Settlement of Agricola Belher infrastructure advance offset against payable to growers | 113 | |
Property, plant, and equipment included in trade accounts payable and accrued expenses | $ 1,583 | $ 98 |
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, 2022 | $ 18 | $ 171,223 | $ 51,115 | $ 1,015 | $ 223,371 |
Beginning 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) | 11 | ||||
Stock-based compensation | 1,253 | 1,253 | |||
Dividends declared to shareholders | (5,102) | (5,102) | |||
Avocados de Jalisco noncontrolling interest | 273 | 273 | |||
Net loss attributable to Calavo Growers, Inc. | (3,068) | (3,068) | |||
Ending balance at Jan. 31, 2023 | $ 18 | 172,524 | 42,945 | 1,288 | 216,775 |
Ending balance, shares at Jan. 31, 2023 | 17,743 | ||||
Beginning balance at Oct. 31, 2023 | $ 18 | 176,481 | 32,338 | 1,392 | 210,229 |
Beginning balance, shares at Oct. 31, 2023 | 17,761 | ||||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings | (599) | (599) | |||
Issuance of common stock in connection with stock-based compensation, net of tax withholdings (in shares) | 39 | ||||
Stock-based compensation | 941 | 941 | |||
Dividends declared to shareholders | (1,781) | (1,781) | |||
Avocados de Jalisco noncontrolling interest | 10 | 10 | |||
Net loss attributable to Calavo Growers, Inc. | (6,267) | (6,267) | |||
Ending balance at Jan. 31, 2024 | $ 18 | $ 176,823 | $ 24,290 | $ 1,402 | $ 202,533 |
Ending balance, shares at Jan. 31, 2024 | 17,800 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (PARENTHETICAL) - $ / shares | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | ||
Dividend paid (in dollars per share) | $ 0.10 | $ 0.2875 |
Description of the business
Description of the business | 3 Months Ended |
Jan. 31, 2024 | |
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 avocados, 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 and salsa. We distribute our products both domestically and internationally and we report our operations in different business segments: Grown and Prepared. We and certain of our subsidiaries have entered into non-binding, exclusive negotiations regarding the potential sale of all of the assets used in our Fresh Cut business and certain related real property for approximately $100.0 million, subject to certain adjustments that may be included in a binding agreement. The Proposed Transaction is expected to close in the second quarter of fiscal 2024. The Fresh Cut business represents substantially all of the business of the Prepared segment other than the guacamole business, which would be retained following the Proposed Transaction. In the first quarter of 2024, management has concluded that the Fresh Cut business meets the requirements to be classified as held for sale and discontinued operations. As a result, the financial results of that business are reported as discontinued operations in the accompanying statements of operations, and its assets and liabilities are reflected as amounts held for sale in the accompanying balance sheets. The Company's reporting segments have also been changed for the effects of the planned divestiture, as described in Note 2. For more information, see Note 11. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of adjustments of a normal recurring nature necessary to present fairly the Company’s financial position, results of operations and cash flows. The results of operations for interim periods are not necessarily indicative of the results that may be expected for a full year. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended Retrospective reclassifications have been made to prior period financial statements and disclosures to present the Fresh Cut business unit as discontinued operations (see Note 11, “Assets Held for Sale and Discontinued Operations”). |
Information regarding our opera
Information regarding our operations in different segments | 3 Months Ended |
Jan. 31, 2024 | |
Information regarding our operations in different segments | |
Information regarding our operations in different segments | 2. Information regarding our operations in different segments Prior to the decision to divest our Fresh Cut business (formerly RFG), the Company’s Prepared reporting segment included the Fresh Cut business unit and our guacamole business. As a result of the planned divestiture, the Fresh Cut business unit is no longer included in our Prepared business segment, and is not included in the tables below. All segment information included herein reflects these changes. See Note 11 for further information. We report our operations in two different business segments: Grown and Prepared. The Grown segment consists of fresh avocados, tomatoes and papayas. The Prepared segment comprises all our guacamole products sold at retail and food service as well as avocado pulp sold to foodservice. These two business segments are presented based on how information is used by our Chief Executive Officer 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. Three months ended January 31, 2024 Three months ended January 31, 2023 Grown Prepared Total Grown Prepared Total Avocados $ 99,631 $ — $ 99,631 $ 102,621 $ — $ 102,621 Tomatoes 10,839 — 10,839 13,310 — 13,310 Papayas 3,082 — 3,082 3,327 — 3,327 Other fresh income 26 — 26 17 — 17 Guacamole — 16,079 16,079 — 16,352 16,352 Salsa — — — — 446 446 Total gross sales 113,578 16,079 129,657 119,275 16,798 136,073 Less sales allowances (552) (1,499) (2,051) (1,527) (1,783) (3,310) Net sales $ 113,026 $ 14,580 $ 127,606 $ 117,748 $ 15,015 $ 132,763 Grown Prepared Total (All amounts are presented in thousands) Three months ended January 31, 2024 Net sales $ 113,026 $ 14,580 $ 127,606 Cost of sales 104,888 10,250 115,138 Gross profit $ 8,138 $ 4,330 $ 12,468 Three months ended January 31, 2023 Net sales $ 117,748 $ 15,015 $ 132,763 Cost of sales 108,267 11,411 119,678 Gross profit $ 9,481 $ 3,604 $ 13,085 For the three months ended January 31, 2024 and 2023, intercompany sales and cost of sales of $0.4 million and $0.3 million between Grown products and Prepared products were eliminated, respectively. Sales to customers outside the U.S. were approximately $10.9 million and $7.6 million for the three months ended January 31, 2024 and 2023. Our foreign operations in Mexico are subject to exchange rate fluctuations and foreign currency transaction costs. The functional currency of our foreign subsidiaries in Mexico is the United States dollar (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 and foreign currency transactions are recognized within cost of sales. We recognized foreign currency remeasurement gains in the current quarter. These gains were due primarily to certain long-term net peso receivables. Foreign currency remeasurement gains, net of losses, for the three months ended January 31, 2024 and 2023 were $1.7 million and $1.3 million respectively. The net carrying value of long-lived assets attributed to geographic areas as of January 31, 2024 and October 31, 2023, are as follows (in thousands): United States Mexico Consolidated January 31, 2024 $ 24,454 $ 34,752 $ 59,206 October 31, 2023 $ 25,986 $ 34,938 $ 60,924 |
Inventories
Inventories | 3 Months Ended |
Jan. 31, 2024 | |
Inventories | |
Inventories | 3. Inventories Inventories consist of the following (in thousands): January 31, October 31, 2024 2023 Fresh fruit $ 20,093 $ 14,815 Packing supplies and ingredients 7,573 7,908 Finished prepared foods 11,885 8,848 Total $ 39,551 $ 31,571 Inventories are stated at the lower of cost or net realizable value. We periodically review the value of items in inventory and record any necessary write downs of inventory based on our assessment of market conditions. Inventory includes reserves of million in slow moving inventories as of January 31, 2024 and October 31, 2023. |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Jan. 31, 2024 | |
Related-Party Transactions | |
Related-Party Transactions | 4. Related party transactions Board of Directors 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 into with other growers. For the three months ended January 31, 2023, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $0.2 million. For the three months ended January 31, 2024, we did not procure any avocados from entities owned or controlled by members of our Board of Directors. We did not have any amounts payable to these Board members as of January 31, 2024 and October 31, 2023. For the three months ended January 31, 2024, we have procured less than $0.1 million of avocados from entities affiliated with our Chief Executive Officer. Agricola Don Memo, S.A. de C.V. (“Don Memo”) Calavo and Agricola Belher (“Belher”) each have an equal one -half ownership interest in Don Memo. Pursuant to a management service agreement, Belher, through its officers and employees, has day-to-day power and authority to manage the operations of Don Memo. As of January 31, 2024, and October 31, 2023, we had an investment of $2.9 million, representing Calavo’s 50% ownership in Don Memo, which was 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 three months ended January 31, 2024 and 2023, we advanced $1.0 million and $0.9 million of preseason advances to Don Memo. As of January 31, 2024 and October 31, 2023, we had outstanding advances of million secured by certain property and equipment of Don Memo. This infrastructure loan accrues interest at . The total outstanding infrastructure loan balance at January 31, 2024 and at October 31, 2023, 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 totaling $4.3 million and $5.4 million as of January 31, 2024 and October 31, 2023, which are netted against the grower payable. In July 2021, we made a bridge loan of 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 against the grower payable due to Belher. The total outstanding bridge loan balance at January 31, 2024 and October 31, 2023, was 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 Mexican partners and created Avocados de Jalisco. Avocados de Jalisco is a Mexican corporation created to engage in procuring, packing and selling avocados. As of January 31, 2024, this entity was approximately owned by Calavo and was consolidated in our financial statements. Avocados de Jalisco built a packinghouse located in Jalisco, Mexico, which began operations in June of 2017. During the three months ended January 31, 2024 and 2023 we purchased approximately |
Other assets
Other assets | 3 Months Ended |
Jan. 31, 2024 | |
Other assets | |
Other assets | 5. Other assets Other assets consist of the following (in thousands): January 31, October 31, 2024 2023 Mexican IVA (i.e. value-added) taxes receivable, net (see Note 10) $ 53,524 $ 49,888 Infrastructure advances 1,641 1,641 Other 809 852 Total $ 55,974 $ 52,381 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Jan. 31, 2024 | |
Stock-Based Compensation | |
Stock-Based Compensation | 6. Stock-Based Compensation In April 2011, our shareholders approved the Calavo Growers, Inc. 2011 Management Incentive Plan (the “2011 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 2011 Plan. Shares were issuable under the 2011 Plan through December 2020. On April 21, 2021, the shareholders of Calavo approved the Calavo Growers, Inc. 2020 Equity Incentive Plan (the “2020 Plan”). This is a Restricted Stock Awards (RSAs) The total recognized stock-based compensation expense for restricted stock awards was less than $0.1 million and $0.7 million for the three months ended January 31, 2024 and 2023, respectively. As of January 31, 2024, there was no unrecognized stock-based compensation costs related to non-vested RSAs. A combined summary of restricted stock award activity, related to our 2011 and 2020 Plans, is as follows (in thousands, except for per share amounts): Weighted-Average Aggregate Number of Shares Grant Price Intrinsic Value Outstanding at October 31, 2023 29 $ 35.24 Vested (28) $ 35.14 Outstanding at January 31, 2024 1 $ 41.39 $ 12 Restricted Stock Units (RSUs) and Performance Restricted Stock Units (PRSUs) On November 1, 2023, each of our 8 directors were granted 4,929 RSUs (for a total of 39,432 RSUs) at a price of $24.35 that will vest November 1, 2024. The total recognized stock-based compensation expense for RSUs was $0.5 million for the three months ended January 31, 2024 and 2023, respectively. As of January 31, 2024, there was $1.7 million of unrecognized stock-based compensation costs related to non-vested RSUs, which the Company expects to recognize over a weighted-average period of 1.1 years. A 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, 2023 51 $ 35.36 Granted 39 $ 24.35 Vested (17) $ 34.24 Forfeited (1) $ 34.51 Outstanding at January 31, 2024 72 $ 29.35 $ 1,869 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 January 31, 2024, the Company still believes that it is not probable that any of the PRSUs for the 2023 and 2022 three-year cumulative performance grant would vest. Therefore, there is 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. We measure the fair value of our stock-based compensation awards on the date of grant. There was no stock option activity for the three months ended January 31, 2024. A summary of stock option activity, related to our 2011 and 2020 Plans, is as follows (in thousands, except for weighted-average exercise price): Weighted-Average Aggregate Exercise Intrinsic Number of Shares Price Value Outstanding at October 31, 2023 525 $ 25.44 Outstanding at January 31, 2024 525 $ 25.44 $ 850 Exercisable at January 31, 2024 19 $ 48.48 $ — The total stock-based compensation expense for options was $0.4 million for the three months ended January 31, 2024. As of January 31, 2024, there was |
Other events
Other events | 3 Months Ended |
Jan. 31, 2024 | |
Other events | |
Other events | 7. Other events Dividend payments On January 31, 2024, we paid a dividend of $0.10 per share, or an aggregate of $1.8 million, to shareholders of record on January 26, 2024. Restricted cash In the prior year, in connection with the our Credit Facility, we temporarily posted $0.8 million of cash collateral to satisfy certain collateral requirements as we transitioned banks providing letters of credit related to our workers compensation policies. Litigation From time to time, we are 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. 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 $151.3 million USD at January 31, 2024) 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 January 31, 2024 to the amount of $3.08 billion Mexican pesos (approx. $179.2 million USD). Additionally, the tax authorities have determined that we owe our employees profit-sharing liability, totaling approximately $118 million Mexican pesos (approx. $6.9 million USD at January 31, 2024). 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 injunction 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 Suit. In so doing, the federal district court did not rule on the substance of the case, stating that the substance of the case 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) to secure the 2013 Assessment , which provides the SAT with certain administrative rights to CDM assets in the unlikely event we do not prevail in our actions through the Federal Tax Court. 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 January 31, 2024 based on our cumulative probability analysis. We incurred |
Noncontrolling interest
Noncontrolling interest | 3 Months Ended |
Jan. 31, 2024 | |
Noncontrolling interest. | |
Noncontrolling interest | 8. Noncontrolling interest The following table reconciles shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands). Three months ended January 31, Avocados de Jalisco noncontrolling interest 2024 2023 Noncontrolling interest, beginning $ 1,392 $ 1,015 Net income attributable to noncontrolling interest of Avocados de Jalisco 10 273 Noncontrolling interest, ending $ 1,402 $ 1,288 |
Earnings per share
Earnings per share | 3 Months Ended |
Jan. 31, 2024 | |
Earnings per share | |
Earnings per share | 9. Earnings per share Basic and diluted net income per share is calculated as follows (data in thousands, except per share data): Three months ended January 31, 2024 2023 Numerator: Net loss from continuing operations $ (2,574) $ (445) Add: Net income attributable to noncontrolling interest (10) (273) Net loss from continuing operations attributable to Calavo Growers, Inc. (2,584) (718) Net loss from discontinued operations (refer to Note 11) (3,683) (2,350) Net loss attributable to Calavo Growers, Inc. $ (6,267) $ (3,068) Denominator: Weighted average shares - Basic 17,799 17,673 Effect on dilutive securities – Restricted stock/units/options (1) — — Weighted average shares - Diluted 17,799 17,673 Net loss from continuing operations Basic $ (0.15) $ (0.04) Diluted $ (0.15) $ (0.04) Net loss from discontinued operations (refer to Note 11) Basic $ (0.21) $ (0.13) Diluted (1) $ (0.21) $ (0.13) Net loss per share attributable to Calavo Growers, Inc: Basic $ (0.35) $ (0.17) Diluted (1) $ (0.35) $ (0.17) (1) For the three months ended January 31, 2024 and 2023, approximately 34,000 shares and 137,000 shares of common stock equivalents, respectively, were excluded in the computation of diluted net loss per share, as the effect would be anti-dilutive given the Company’s net loss for those periods . |
Mexican IVA taxes receivable
Mexican IVA taxes receivable | 3 Months Ended |
Jan. 31, 2024 | |
Mexican IVA taxes receivable | |
Mexican IVA taxes receivable | 10. 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 recoverable from the Mexican government. As of January 31, 2024, and October 31, 2023, CDM IVA receivables totaled $53.5 million (928.7 million Mexican pesos) and $49.9 million (913.6 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 2023, the tax authorities began objecting to refund requests and supporting documentation that had previously been deemed acceptable to process a refund. Additionally, they are also contesting 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 other 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 was not properly documented relative to its declared tax structure and therefore CDM could not 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. 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 VAT is recoverable, since CDM demonstrated the existence of operations carried under the maquila services. ● Resolved that certain VAT 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. $1.0 million USD at January 31, 2023) and confirming that the $6.9 million pesos (approx. $0.4 million USD at January 31, 2023) related to packing materials will not be recoverable. For the three months ended January 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. 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 January 31, 2024, 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. |
Assets Held for Sale and Discon
Assets Held for Sale and Discontinued Operations | 3 Months Ended |
Jan. 31, 2024 | |
Assets Held for Sale and Discontinued Operations | |
Assets Held for Sale and Discontinued Operations | 11. Assets Held for Sale and Discontinued Operations We and certain of our subsidiaries have entered into non-binding, exclusive negotiations regarding the potential sale of all of the assets used in our Fresh Cut business and certain related real property for approximately $100.0 million, subject to certain adjustments that may be included in a binding agreement. The Proposed Transaction is expected to close in the second quarter of fiscal 2024.The Fresh Cut business represents substantially all of the business of the Prepared segment other than the guacamole business, which would be retained following the Proposed Transaction. In the first quarter of 2024, management has concluded that the Fresh Cut business meets the requirements to be classified as held for sale and discontinued operations. As a result, the financial results of that business are reported as discontinued operations in the accompanying statements of operations, and its assets and liabilities are reflected as amounts held for sale in the accompanying balance sheets. The Company's reporting segments have also been changed for the effects of the planned divestiture, as described in Note 2. The following table presents the major classes of assets and liabilities of the Fresh Cut business that are classified as held for sale in the accompanying balance sheets (in thousands). January 31, October 31, 2024 2023 Accounts receivable, net $ 27,863 $ 27,479 Inventories, net 7,749 7,859 Prepaid expenses and other current assets 2,252 2,195 Property, plant, and equipment, net 50,298 51,805 Operating lease right-of-use assets 28,942 29,676 Goodwill 18,442 18,442 Intangibles 5,047 5,423 Other assets 78 78 Total assets held for sale $ 140,671 $ 142,957 Trade accounts payable $ 10,765 $ 10,440 Accrued expenses 13,870 15,299 Current portion of operating leases 3,385 3,399 Current portion of long-term obligations and finance leases 625 773 Long-term operating leases, less current portion 27,349 28,065 Long-term obligations and finance leases, less current portion 1,012 1,002 Other long-term liabilities 216 228 Total liabilities held for sale $ 57,222 $ 59,206 Goodwill related to our Prepared segment was allocated between our Fresh Cut and guacamole businesses based on the relative fair value of the disposal group and the portion of the reporting unit to be retained. The following table summarizes the results of operations of the Fresh Cut business that are being reported as discontinued operations (in thousands): Three months ended January 31, 2024 2023 Net sales $ 86,413 $ 93,441 Cost of sales 85,582 92,094 Gross profit 831 1,347 Selling, general and administrative 4,496 4,711 Operating loss (3,665) (3,364) Interest expense (28) (39) Other income, net 10 14 Loss from discontinued operations before income taxes (3,683) (3,389) Income tax benefit — 1,039 Net loss from discontinued operations $ (3,683) $ (2,350) Select cash flow information related to the Fresh Cut business follows (in thousands): Three months ended January 31, 2024 2023 Net cash used in operating activities $ (3,028) $ (2,252) Net cash used in investing activities $ (353) $ (3,112) |
Description of the business (Po
Description of the business (Policies) | 3 Months Ended |
Jan. 31, 2024 | |
Description of the business | |
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 avocados, 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 and salsa. We distribute our products both domestically and internationally and we report our operations in different business segments: Grown and Prepared. We and certain of our subsidiaries have entered into non-binding, exclusive negotiations regarding the potential sale of all of the assets used in our Fresh Cut business and certain related real property for approximately $100.0 million, subject to certain adjustments that may be included in a binding agreement. The Proposed Transaction is expected to close in the second quarter of fiscal 2024. The Fresh Cut business represents substantially all of the business of the Prepared segment other than the guacamole business, which would be retained following the Proposed Transaction. In the first quarter of 2024, management has concluded that the Fresh Cut business meets the requirements to be classified as held for sale and discontinued operations. As a result, the financial results of that business are reported as discontinued operations in the accompanying statements of operations, and its assets and liabilities are reflected as amounts held for sale in the accompanying balance sheets. The Company's reporting segments have also been changed for the effects of the planned divestiture, as described in Note 2. For more information, see Note 11. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of adjustments of a normal recurring nature necessary to present fairly the Company’s financial position, results of operations and cash flows. The results of operations for interim periods are not necessarily indicative of the results that may be expected for a full year. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended Retrospective reclassifications have been made to prior period financial statements and disclosures to present the Fresh Cut business unit as discontinued operations (see Note 11, “Assets Held for Sale and Discontinued Operations”). |
Information regarding our ope_2
Information regarding our operations in different segments (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Information regarding our operations in different segments | |
Schedule of sales by product and segment | Three months ended January 31, 2024 Three months ended January 31, 2023 Grown Prepared Total Grown Prepared Total Avocados $ 99,631 $ — $ 99,631 $ 102,621 $ — $ 102,621 Tomatoes 10,839 — 10,839 13,310 — 13,310 Papayas 3,082 — 3,082 3,327 — 3,327 Other fresh income 26 — 26 17 — 17 Guacamole — 16,079 16,079 — 16,352 16,352 Salsa — — — — 446 446 Total gross sales 113,578 16,079 129,657 119,275 16,798 136,073 Less sales allowances (552) (1,499) (2,051) (1,527) (1,783) (3,310) Net sales $ 113,026 $ 14,580 $ 127,606 $ 117,748 $ 15,015 $ 132,763 |
Schedule of segment gross margin | Grown Prepared Total (All amounts are presented in thousands) Three months ended January 31, 2024 Net sales $ 113,026 $ 14,580 $ 127,606 Cost of sales 104,888 10,250 115,138 Gross profit $ 8,138 $ 4,330 $ 12,468 Three months ended January 31, 2023 Net sales $ 117,748 $ 15,015 $ 132,763 Cost of sales 108,267 11,411 119,678 Gross profit $ 9,481 $ 3,604 $ 13,085 |
Schedule of long-lived assets by geographic areas | The net carrying value of long-lived assets attributed to geographic areas as of January 31, 2024 and October 31, 2023, are as follows (in thousands): United States Mexico Consolidated January 31, 2024 $ 24,454 $ 34,752 $ 59,206 October 31, 2023 $ 25,986 $ 34,938 $ 60,924 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Inventories | |
Schedule of Inventories | Inventories consist of the following (in thousands): January 31, October 31, 2024 2023 Fresh fruit $ 20,093 $ 14,815 Packing supplies and ingredients 7,573 7,908 Finished prepared foods 11,885 8,848 Total $ 39,551 $ 31,571 |
Other assets (Tables)
Other assets (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Other assets | |
Schedule of Other Assets | Other assets consist of the following (in thousands): January 31, October 31, 2024 2023 Mexican IVA (i.e. value-added) taxes receivable, net (see Note 10) $ 53,524 $ 49,888 Infrastructure advances 1,641 1,641 Other 809 852 Total $ 55,974 $ 52,381 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Stock-Based Compensation | |
Summary of restricted stock award activity | A combined summary of restricted stock award activity, related to our 2011 and 2020 Plans, is as follows (in thousands, except for per share amounts): Weighted-Average Aggregate Number of Shares Grant Price Intrinsic Value Outstanding at October 31, 2023 29 $ 35.24 Vested (28) $ 35.14 Outstanding at January 31, 2024 1 $ 41.39 $ 12 |
Summary of RSU activity | A 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, 2023 51 $ 35.36 Granted 39 $ 24.35 Vested (17) $ 34.24 Forfeited (1) $ 34.51 Outstanding at January 31, 2024 72 $ 29.35 $ 1,869 |
Summary of stock option activity | There was no stock option activity for the three months ended January 31, 2024. A summary of stock option activity, related to our 2011 and 2020 Plans, is as follows (in thousands, except for weighted-average exercise price): Weighted-Average Aggregate Exercise Intrinsic Number of Shares Price Value Outstanding at October 31, 2023 525 $ 25.44 Outstanding at January 31, 2024 525 $ 25.44 $ 850 Exercisable at January 31, 2024 19 $ 48.48 $ — |
Noncontrolling interest (Tables
Noncontrolling interest (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Noncontrolling interest. | |
Schedule of reconciliation of shareholders' equity attributable to noncontrolling interest | The following table reconciles shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands). Three months ended January 31, Avocados de Jalisco noncontrolling interest 2024 2023 Noncontrolling interest, beginning $ 1,392 $ 1,015 Net income attributable to noncontrolling interest of Avocados de Jalisco 10 273 Noncontrolling interest, ending $ 1,402 $ 1,288 |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Earnings per share | |
Schedule of basic and diluted net income per share | Three months ended January 31, 2024 2023 Numerator: Net loss from continuing operations $ (2,574) $ (445) Add: Net income attributable to noncontrolling interest (10) (273) Net loss from continuing operations attributable to Calavo Growers, Inc. (2,584) (718) Net loss from discontinued operations (refer to Note 11) (3,683) (2,350) Net loss attributable to Calavo Growers, Inc. $ (6,267) $ (3,068) Denominator: Weighted average shares - Basic 17,799 17,673 Effect on dilutive securities – Restricted stock/units/options (1) — — Weighted average shares - Diluted 17,799 17,673 Net loss from continuing operations Basic $ (0.15) $ (0.04) Diluted $ (0.15) $ (0.04) Net loss from discontinued operations (refer to Note 11) Basic $ (0.21) $ (0.13) Diluted (1) $ (0.21) $ (0.13) Net loss per share attributable to Calavo Growers, Inc: Basic $ (0.35) $ (0.17) Diluted (1) $ (0.35) $ (0.17) (1) For the three months ended January 31, 2024 and 2023, approximately 34,000 shares and 137,000 shares of common stock equivalents, respectively, were excluded in the computation of diluted net loss per share, as the effect would be anti-dilutive given the Company’s net loss for those periods . |
Assets Held for Sale and Disc_2
Assets Held for Sale and Discontinued Operations (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Assets Held for Sale and Discontinued Operations | |
Schedule of information being reported as discontinued operations | January 31, October 31, 2024 2023 Accounts receivable, net $ 27,863 $ 27,479 Inventories, net 7,749 7,859 Prepaid expenses and other current assets 2,252 2,195 Property, plant, and equipment, net 50,298 51,805 Operating lease right-of-use assets 28,942 29,676 Goodwill 18,442 18,442 Intangibles 5,047 5,423 Other assets 78 78 Total assets held for sale $ 140,671 $ 142,957 Trade accounts payable $ 10,765 $ 10,440 Accrued expenses 13,870 15,299 Current portion of operating leases 3,385 3,399 Current portion of long-term obligations and finance leases 625 773 Long-term operating leases, less current portion 27,349 28,065 Long-term obligations and finance leases, less current portion 1,012 1,002 Other long-term liabilities 216 228 Total liabilities held for sale $ 57,222 $ 59,206 Three months ended January 31, 2024 2023 Net sales $ 86,413 $ 93,441 Cost of sales 85,582 92,094 Gross profit 831 1,347 Selling, general and administrative 4,496 4,711 Operating loss (3,665) (3,364) Interest expense (28) (39) Other income, net 10 14 Loss from discontinued operations before income taxes (3,683) (3,389) Income tax benefit — 1,039 Net loss from discontinued operations $ (3,683) $ (2,350) Three months ended January 31, 2024 2023 Net cash used in operating activities $ (3,028) $ (2,252) Net cash used in investing activities $ (353) $ (3,112) |
Description of the business (De
Description of the business (Details) $ in Millions | 3 Months Ended |
Jan. 31, 2024 USD ($) segment | |
Description of the business | |
Number of reportable segments | segment | 2 |
Consideration for sale | $ | $ 100 |
Information regarding our ope_3
Information regarding our operations in different segments - Product (Details) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2024 USD ($) segment | Jan. 31, 2023 USD ($) | Oct. 31, 2023 USD ($) | |
Segment reporting information | |||
Number of reportable segments | segment | 2 | ||
Total gross sales | $ 129,657 | $ 136,073 | |
Less sales allowances | (2,051) | (3,310) | |
Net sales | 127,606 | 132,763 | |
Goodwill | 10,211 | $ 10,211 | |
Avocados | |||
Segment reporting information | |||
Total gross sales | 99,631 | 102,621 | |
Tomatoes | |||
Segment reporting information | |||
Total gross sales | 10,839 | 13,310 | |
Papayas | |||
Segment reporting information | |||
Total gross sales | 3,082 | 3,327 | |
Other fresh income | |||
Segment reporting information | |||
Total gross sales | 26 | 17 | |
Guacamole | |||
Segment reporting information | |||
Total gross sales | 16,079 | 16,352 | |
Salsa | |||
Segment reporting information | |||
Total gross sales | 446 | ||
Grown | |||
Segment reporting information | |||
Total gross sales | 113,578 | 119,275 | |
Less sales allowances | (552) | (1,527) | |
Net sales | 113,026 | 117,748 | |
Grown | Avocados | |||
Segment reporting information | |||
Total gross sales | 99,631 | 102,621 | |
Grown | Tomatoes | |||
Segment reporting information | |||
Total gross sales | 10,839 | 13,310 | |
Grown | Papayas | |||
Segment reporting information | |||
Total gross sales | 3,082 | 3,327 | |
Grown | Other fresh income | |||
Segment reporting information | |||
Total gross sales | 26 | 17 | |
Prepared | |||
Segment reporting information | |||
Total gross sales | 16,079 | 16,798 | |
Less sales allowances | (1,499) | (1,783) | |
Net sales | 14,580 | 15,015 | |
Prepared | Guacamole | |||
Segment reporting information | |||
Total gross sales | $ 16,079 | 16,352 | |
Prepared | Salsa | |||
Segment reporting information | |||
Total gross sales | $ 446 |
Information regarding our ope_4
Information regarding our operations in different segments - Gross Profit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Segment reporting information | ||
Net sales | $ 127,606 | $ 132,763 |
Cost of sales | 115,138 | 119,678 |
Gross profit | 12,468 | 13,085 |
Grown | ||
Segment reporting information | ||
Net sales | 113,026 | 117,748 |
Cost of sales | 104,888 | 108,267 |
Gross profit | 8,138 | 9,481 |
Prepared | ||
Segment reporting information | ||
Net sales | 14,580 | 15,015 |
Cost of sales | 10,250 | 11,411 |
Gross profit | 4,330 | 3,604 |
Elimination between Grown products and Prepared products | ||
Segment reporting information | ||
Sales and cost of sales eliminated | $ 400 | $ 300 |
Information regarding our ope_5
Information regarding our operations in different segments - Geographic (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Oct. 31, 2023 | |
Segment reporting information | |||
Net sales | $ 127,606 | $ 132,763 | |
Long-lived assets | 59,206 | $ 60,924 | |
Foreign currency gains (losses) | 1,700 | 1,300 | |
Outside United States | |||
Segment reporting information | |||
Net sales | 10,900 | $ 7,600 | |
United States | |||
Segment reporting information | |||
Long-lived assets | 24,454 | 25,986 | |
Mexico | |||
Segment reporting information | |||
Long-lived assets | $ 34,752 | $ 34,938 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jan. 31, 2024 | Oct. 31, 2023 |
Inventories | ||
Fresh fruit | $ 20,093 | $ 14,815 |
Packing supplies and ingredients | 7,573 | 7,908 |
Finished prepared foods | 11,885 | 8,848 |
Total inventories | 39,551 | 31,571 |
Inventory valuation reserves | $ 500 | $ 400 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||||||
Jul. 31, 2021 | Jan. 31, 2024 | Jan. 31, 2023 | Jul. 31, 2024 | Oct. 31, 2023 | Jul. 31, 2023 | Jul. 31, 2022 | Oct. 31, 2020 | |
Related-Party Transactions | ||||||||
Investments in unconsolidated entities | $ 2,903 | $ 2,902 | ||||||
Advances to suppliers | (1,388) | $ (2,676) | ||||||
Advances to suppliers | 13,409 | 14,684 | ||||||
Non-cash settlement of advance | $ 113 | |||||||
Don Memo | Agricola Belher | Don Memo | ||||||||
Related-Party Transactions | ||||||||
Ownership interest (as a percent) | 50% | |||||||
Directors | ||||||||
Related-Party Transactions | ||||||||
Purchases from related parties | 200 | |||||||
Accounts payable to related parties | $ 0 | 0 | ||||||
Chief Executive Officer | Maximum | ||||||||
Related-Party Transactions | ||||||||
Purchases from related parties | 100 | |||||||
Equity method investment-Don Memo | ||||||||
Related-Party Transactions | ||||||||
Purchases from related parties | 4,200 | 5,000 | ||||||
Investments in unconsolidated entities | 2,900 | 2,900 | ||||||
Advances to suppliers | 1,000 | 900 | ||||||
Advances to suppliers | 6,500 | 7,300 | ||||||
Loan receivable fixed interest rate (as a percent) | 7.25% | |||||||
Commitment amount | $ 2,400 | |||||||
Loan to related parties | $ 1,600 | $ 1,600 | ||||||
Equity method investment-Don Memo | Don Memo | ||||||||
Related-Party Transactions | ||||||||
Ownership interest (as a percent) | 50% | 50% | ||||||
Other related party | Agricola Belher | ||||||||
Related-Party Transactions | ||||||||
Purchases from related parties | $ 3,000 | 3,900 | ||||||
Amount loaned | $ 3,500 | |||||||
Advances to suppliers | 4,300 | $ 5,400 | ||||||
Loan receivable fixed interest rate (as a percent) | 10% | |||||||
Loan to related parties | 1,600 | $ 1,700 | ||||||
Expected payment on July 31, 2022 | $ 900 | |||||||
Expected payment on July 31, 2023 | $ 900 | |||||||
Expected payment on July 31, 2024 | $ 1,700 | |||||||
Subsidiary-Avocados de Jalisco | ||||||||
Related-Party Transactions | ||||||||
Purchases from related parties | $ 2,500 | $ 3,700 | ||||||
Subsidiary-Avocados de Jalisco | Avocados de Jalisco | ||||||||
Related-Party Transactions | ||||||||
Subsidiary ownership (as a percent) | 83% |
Other assets (Details)
Other assets (Details) - USD ($) $ in Thousands | Jan. 31, 2024 | Oct. 31, 2023 |
Other assets. | ||
Mexican IVA (i.e. value-added) taxes receivable, net | $ 53,524 | $ 49,888 |
Infrastructure advances | 1,641 | 1,641 |
Other | 809 | 852 |
Total | $ 55,974 | $ 52,381 |
Stock-Based Compensation - Gene
Stock-Based Compensation - General (Details) - 2020 Management Incentive Plan | Apr. 21, 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 ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Nov. 01, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Restricted stock | |||
Share-based Compensation | |||
Stock-based compensation expense | $ 100 | $ 700 | |
Outstanding (in shares), Beginning Balance | 29,000 | 29,000 | |
Vested (in shares) | (28,000) | ||
Outstanding (in shares), Ending Balance | 1,000 | ||
Outstanding, Weighted-Average Exercise Price, beginning balance | $ 35.24 | $ 35.24 | |
Vested, Weighted-Average Grant Price | 35.14 | ||
Outstanding, Weighted-Average Exercise Price, ending balance | $ 41.39 | ||
Aggregate Intrinsic Value | $ 12 | ||
Unrecognized stock based compensation expenses | $ 0 | ||
RSU | |||
Share-based Compensation | |||
Stock closing price awarded (in dollars per share) | $ 24.35 | $ 24.35 | |
Stock-based compensation expense | $ 500 | $ 500 | |
Outstanding (in shares), Beginning Balance | 51,000 | 51,000 | |
Granted (in shares) | 4,929 | 39,000 | |
Vested (in shares) | (17,000) | ||
Forfeited (in shares) | (1,000) | ||
Outstanding (in shares), Ending Balance | 72,000 | ||
Outstanding, Weighted-Average Exercise Price, beginning balance | $ 35.36 | $ 35.36 | |
Granted, Weighted-Average Grant Price | $ 24.35 | 24.35 | |
Vested, Weighted-Average Grant Price | 34.24 | ||
Forfeited, Weighted-Average Grant Price | 34.51 | ||
Outstanding, Weighted-Average Exercise Price, ending balance | $ 29.35 | ||
Aggregate Intrinsic Value | $ 1,869 | ||
Unrecognized stock based compensation expenses | $ 1,700 | ||
Unrecognized compensation cost period | 1 year 1 month 6 days | ||
RSU | Aggregate | |||
Share-based Compensation | |||
Granted (in shares) | 39,432 | ||
PRSU | |||
Share-based Compensation | |||
Unrecognized stock based compensation expenses | $ 0 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Jan. 31, 2024 USD ($) $ / shares shares | |
Share-based Compensation | |
Outstanding, Number of Shares, Beginning Balance | shares | 525 |
Outstanding, Number of Shares, Ending Balance | shares | 525 |
Exercisable, Number of Shares | shares | 19 |
Outstanding, Weighted-Average Exercise Price | $ / shares | $ 25.44 |
Outstanding, Weighted-Average Exercise Price, ending balance | $ / shares | 25.44 |
Exercisable, Weighted-Average Exercise Price | $ / shares | $ 48.48 |
Outstanding, Aggregate Intrinsic Value | $ | $ 850 |
Exercisable stock options, weighted-average remaining contractual term | 2 months 12 days |
Employee Stock Option [Member] | |
Share-based Compensation | |
Stock-based compensation expense | $ | $ 400 |
Unrecognized stock based compensation expenses | $ | $ 200 |
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 |
Other events (Details)
Other events (Details) $ / shares in Units, $ in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | ||||||||
Oct. 10, 2022 MXN ($) | Aug. 18, 2021 | Jul. 31, 2018 MXN ($) | Jan. 31, 2024 USD ($) $ / shares | Jan. 31, 2023 USD ($) $ / shares | Jan. 31, 2024 MXN ($) | Oct. 31, 2023 USD ($) | Jan. 31, 2023 MXN ($) | Jul. 31, 2021 USD ($) | Jun. 25, 2021 USD ($) | |
Dividend paid (in dollars per share) | $ / shares | $ 0.10 | $ 0.2875 | ||||||||
Dividend amount paid to shareholders | $ 1,781 | $ 5,102 | ||||||||
Restricted cash | $ 761 | |||||||||
Expenses related to Mexican tax matters | 383 | 2,048 | ||||||||
Mexican Tax Authority | ||||||||||
Tax dispute liability accrued | $ 1,000 | $ 18 | ||||||||
Mexican Tax Authority | Tax Assessment 2013 | ||||||||||
Tax assessment | $ 3,100 | |||||||||
Amount disputed | $ 2,600 | 151,300 | ||||||||
Estimate of loss | 179,200 | $ 3,080 | ||||||||
Fixed assets net book value under lien | $ 26,000 | |||||||||
Bank accounts under lien | $ 1,000 | |||||||||
Percentage of tax on fruit purchase deposits | 16% | |||||||||
Tax dispute liability accrued | $ 11,000 | |||||||||
Expenses related to Mexican tax matters | 200 | |||||||||
Mexican Tax Authority | Tax Assessment 2013 | Employee Profit Sharing Liability | ||||||||||
Estimate of loss | $ 6,900 | $ 118 |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Noncontrolling interest. | ||
Noncontrolling interest, beginning | $ 1,392 | $ 1,015 |
Net income attributable to noncontrolling interest of Avocados de Jalisco | 10 | 273 |
Noncontrolling interest, ending | $ 1,402 | $ 1,288 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Earnings per share | ||
Net loss from continuing operations | $ (2,574) | $ (445) |
Add: Net income attributable to noncontrolling interest | (10) | (273) |
Net loss from continuing operations attributable to Calavo Growers, Inc. | (2,584) | (718) |
Net loss from discontinued operations | (3,683) | (2,350) |
Net loss attributable to Calavo Growers, Inc. | $ (6,267) | $ (3,068) |
Weighted average shares - Basic (in shares) | 17,799,000 | 17,673,000 |
Weighted average shares - Diluted (in shares) | 17,799,000 | 17,673,000 |
Net loss from continuing operations | ||
Basic, Continuing Operations (in dollars per shares) | $ (0.15) | $ (0.04) |
Diluted, Continuing Operations (in dollars per shares) | (0.15) | (0.04) |
Net loss from discontinued operations | ||
Basic, Discontinued Operations (in dollars per shares) | (0.21) | (0.13) |
Diluted, Discontinued Operations (in dollars per shares) | (0.21) | (0.13) |
Net loss per share attributable to Calavo Growers, Inc: | ||
Net loss attributable to Calavo Growers, Inc(in dollar per share) | (0.35) | (0.17) |
Net loss attributable to Calavo Growers, Inc(in dollar per share) | $ (0.35) | $ (0.17) |
Antidilutive shares excluded from EPS (in shares) | 34,000 | 137,000 |
Mexican IVA taxes receivable (D
Mexican IVA taxes receivable (Details) - Mexican Tax Authority $ in Millions, $ in Millions | 3 Months Ended | |||||||
Jan. 31, 2023 USD ($) | Jan. 31, 2024 USD ($) | Jan. 31, 2024 MXN ($) | Oct. 31, 2023 USD ($) | Oct. 31, 2023 MXN ($) | Jan. 31, 2023 MXN ($) | Apr. 30, 2022 USD ($) | Apr. 30, 2022 MXN ($) | |
IVA receivables | ||||||||
IVA receivables balance | $ 53.5 | $ 928.7 | $ 49.9 | $ 913.6 | ||||
Unrecoverable value added tax | $ 0.4 | $ 6.9 | $ 0.4 | $ 6.9 | ||||
Tax refund from SAT | 1 | $ 18 | ||||||
Receivable reserve | $ 1.4 |
Assets Held for Sale and Disc_3
Assets Held for Sale and Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jan. 31, 2024 | Jan. 31, 2023 | Oct. 31, 2024 | Oct. 31, 2023 | |
Held for Sale and Discontinued Operations | ||||
Consideration for sale | $ 100,000 | |||
Discontinued operations, Held for sale | ||||
Held for Sale and Discontinued Operations | ||||
Consideration for sale | $ 100,000 | |||
Fresh-cut products | Discontinued operations, Held for sale | ||||
Major classes of assets and liabilities | ||||
Accounts receivable, net | 27,863 | $ 27,479 | ||
Inventories, net | 7,749 | 7,859 | ||
Prepaid expenses and other current assets | 2,252 | 2,195 | ||
Property, plant, and equipment, net | 50,298 | 51,805 | ||
Operating lease right-of-use assets | 28,942 | 29,676 | ||
Goodwill | 18,442 | 18,442 | ||
Intangibles | 5,047 | 5,423 | ||
Other assets | 78 | 78 | ||
Total assets held for sale | 140,671 | 142,957 | ||
Trade accounts payable | 10,765 | 10,440 | ||
Accrued expenses | 13,870 | 15,299 | ||
Current portion of operating leases | 3,385 | 3,399 | ||
Current portion of long-term obligations and finance leases | 625 | 773 | ||
Long-term operating leases, less current portion | 27,349 | 28,065 | ||
Long-term obligations and finance leases, less current portion | 1,012 | 1,002 | ||
Other long-term liabilities | 216 | 228 | ||
Total liabilities held for sale | 57,222 | $ 59,206 | ||
Results of operations | ||||
Net sales | 86,413 | $ 93,441 | ||
Cost of sales | 85,582 | 92,094 | ||
Gross profit | 831 | 1,347 | ||
Selling, general and administrative | 4,496 | 4,711 | ||
Operating loss | (3,665) | (3,364) | ||
Interest Expense | (28) | (39) | ||
Other income, net | 10 | 14 | ||
Loss from discontinued operations before income taxes | (3,683) | (3,389) | ||
Income tax benefit | 1,039 | |||
Net loss from discontinued operations | (3,683) | (2,350) | ||
Select cash flow information | ||||
Net cash used in operating activities | (3,028) | (2,252) | ||
Net cash used in investing activities | $ (353) | $ (3,112) |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (6,267) | $ (3,068) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jan. 31, 2024 | |
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 |