Calavo's Second Quarter Sets Record

Revenues surge 43% highest single-period sales in company history.

Published on: Jul 1, 2008

Calavo Growers, Inc., Santa Paula, a leader in avocado marketing and an expanding provider of other fresh commodity-produce items, reported solidly profitable fiscal 2008 second quarter and first-half operating results. The company's latest move ("Calavo acquires Hawaiian papaya firm") is reported on Page 9 of the July California Farmer.

For the three months ended April 30, 2008, revenues surged 43% to $98.8 million - the highest quarterly total in company history - from $69.1 million in the corresponding period last year. Substantial growth in both of Calavo's business segments - fresh products and processed products - contributed to the company's strong top-line performance. Net income in the most recent period totaled $1.6 million, equal to $0.11 per diluted share, which compares with $2.6 million, or $0.18 per diluted share in the like quarter of fiscal 2007.

Fiscal 2008 first-half revenues advanced to a record $171.0 million, a 35% gain from $126.4 million one year earlier. Net income totaled $2.3 million, or $0.16 per diluted share, versus $3.9 million, approximating $0.27 per diluted share, in the initial six months of fiscal 2007.

Chairman, President and CEO Lee E. Cole says that profit was constrained by the effects of substantially higher costs for Mexican fresh avocados, "which reduced Calavo's operating performance in the second quarter. With California avocado packing not accelerating until the final month of the quarter, and the Chilean fruit harvest ebbing early in the period primarily due to the freeze that took place in July of 2007, we were reliant on Mexican volumes to satisfy fresh and processed-product demand."

With respect to the company's robust top-line year-over-year growth in the second quarter, Cole notes that:

* California avocado sales rose 79%. Nearly 60% of California avocado sales came in the latter portion of the period.
* Sales of fresh avocados sourced and packed in Mexico climbed 20%.
* Fresh diversified product revenues surged 120%, principally on the strength of tomato and pineapple sales.
* Processed product segment sales moved up 14% in the most recent period driven, in part, by demand for Calavo's ultra-high-pressure guacamole, which continues penetrating new accounts in both retail and food service sectors.

Even while supporting $29.6 million in additional revenue in the most recent quarter, sales, general and administrative (SG&A) expense fell $74,000 versus last year's second period. As a percentage of total revenue, SG&A declined by 215 basis points from 6.9% in the fiscal 2007 second quarter to approximately 4.8% this year.