SANTA PAULA, Calif. - Calavo Growers , Inc. (NASDAQ:CVGW), a prominent player in the avocado and guacamole distribution sector, announced its financial outcomes for the third fiscal quarter, which concluded on July 31, 2024. The company noted an 11.7% increase in total net sales to $179.6 million compared to the same period the previous year. However, gross profit saw a decline of 8.7% to $20.1 million.
The Grown segment's net sales rose by 13.3% to $163.2 million, while the Prepared segment experienced a 2.4% decrease in net sales, down to $16.4 million. Grown segment gross profit fell by $1.2 million to $18.2 million, and Prepared segment gross profit decreased by $0.8 million to $1.9 million.
Net income for the quarter stood at $5.4 million, or $0.30 per diluted share, a drop from the prior year's $8.7 million, or $0.48 per diluted share. Adjusted net income, however, improved to $10.2 million, or $0.57 per diluted share, from $7.7 million, or $0.43 per diluted share, in the previous year. Adjusted EBITDA showed modest growth from $13.0 million to $13.5 million.
The company highlighted that despite supply disruptions from Mexico, strong avocado margins contributed to the Grown segment's gross profit performance. The Prepared segment faced challenges due to higher fruit input costs, although volume increased by 7%.
Calavo Growers successfully sold its Fresh Cut business on August 15, 2024, for $83.0 million, subject to adjustments. This transaction led to the retirement of the company's remaining debt balance, improving its financial position. Additionally, the Board of Directors approved a dividend increase to $0.20 per share, payable on October 30, 2024, to shareholders on record as of October 2, 2024.
President and CEO Lee Cole expressed optimism about the company's core avocado business and upcoming innovative guacamole products expected to launch in the fourth quarter. The company plans to invest in its core businesses and return cash to shareholders over time.
This financial report is based on a press release statement and contains forward-looking statements subject to risks and uncertainties. The information presented provides an overview of Calavo Growers' financial performance without implying any endorsement of the company's strategies or future prospects.
In other recent news, Calavo Growers has seen a series of significant developments. The company recently announced the completion of its Fresh Cut business sale to F&S Fresh Foods for $83 million, enabling a strategic shift to focus on its primary avocado and guacamole operations. Calavo Growers also reported a substantial beat on earnings and revenue for its fiscal second quarter, with an adjusted EPS of $0.50 and revenue of $184.4 million, surpassing analysts' projections.
Furthermore, the company's stock price target was revised from $31 to $25, maintaining a Hold rating, as a result of avocado market trends and the recent sale of its Fresh Cut business. In addition to these changes, Calavo Growers has welcomed former CFO John Lindeman to its Board of Directors and Audit Committee, aligning with the company's strategic realignment plans.
Lastly, an internal investigation concerning potential violations of the Foreign Corrupt Practices Act in Mexico is nearing completion, reflecting Calavo Growers' commitment to strong corporate governance. These recent developments provide insights into the company's strategic growth and operational changes.
InvestingPro Insights
As Calavo Growers, Inc. (NASDAQ:CVGW) navigates a challenging fiscal environment, the company's financial health and market performance are under scrutiny. Here are key insights based on the latest data from InvestingPro:
According to InvestingPro, the company's market capitalization stands at $427.38 million, reflecting its current value in the market. Despite a notable revenue growth of 13.27% over the last twelve months as of Q2 2024, the company's gross profit margin remains low at 7.46%. This aligns with the reported decline in gross profit in the recent financial outcomes, suggesting that while sales are increasing, profitability is under pressure.
InvestingPro Tips highlight that analysts are expecting an increase in net income this year, which could signal a potential turnaround from the negative earnings per share (EPS) reported in the last twelve months, with both basic and diluted EPS at -$0.29. However, two analysts have revised their earnings downwards for the upcoming period, indicating that market expectations are mixed. With a high Price/Earnings (P/E) ratio of 634.17, the company is trading at a valuation that suggests investors are anticipating future growth.
One bright spot for investors is the company's dividend track record. Calavo Growers has maintained dividend payments for 23 consecutive years, with the latest dividend yield at 1.66%. This consistent return to shareholders is a positive sign of the company's commitment to providing value, even amidst financial headwinds.
For those interested in deeper analysis, InvestingPro offers additional tips on Calavo Growers, providing a more comprehensive understanding of its financial health and market position.
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