Calavo Reports Flat Net Income, Growing Margins and Revenues
Santa Paula, CA-
By ANUK Staff
3.6.13
Calavo Growers, Inc., avocado industry leader and growing value-added fresh food provider, has announced fiscal first quarter results for 2013. First-quarter revenues and gross margin set new first-quarter records paced by sharply higher unit volume in its Fresh business segment and robust year-over-year top-line growth in its Renaissance Food Group, LLC (RFG) business segment.
Highlights from the first quarter include: a 31 percent increase in net income to $3.5 million before the effect of $1.2 Million RFG performance-based earn-out consideration expense, reducing net income to $2.7 million - the same as last year's figure.
Revenues for the quarter increased 19% from $117.4 million last year to $139.5 million. Gross margins rose $13.1 million from last year’s $11.9 million, representing a first-quarter record.
Additionally, fresh unit volume climbed 40%, with a 36% jump in avocados and a 132% increase in tomato.
Chairman, President and Chief Executive Officer Lee E. Cole stated: “Calavo delivered excellent operating results in the first quarter with each of the company’s three business segments—Fresh, Calavo Foods and RFG—registering higher revenues to pace our performance. Of particular note, we sold 36 percent more cartons of fresh avocados quarter-over-quarter—nearly 900,000 additional units or about 22 million pounds—reflective of the steady rise in demand. Furthermore, in line with expectations, we saw a sharp recovery in fresh tomato volume and pricing over last year’s market glut, with units sold rising 132 percent, to augment results in the Fresh business segment.Lee continued, “While first quarter net income was constrained by the $1.2 million performance-based earn-out consideration recorded for the RFG transaction, we view this as a positive occurrence: RFG is exceeding performance targets established as part of its acquisition by Calavo. In the short run, the performance-based consideration expense reduces net income; taking in the bigger picture, however, RFG is exceeding our expectations and making a solid incremental contribution to the company’s results.”
The company noted that moderating prices of Mexican avocados are anticipated to positively impact Calavo Foods segment results in subsequent quarters of fiscal 2013.
Revenues in the RFG business segment jumped 22 percent year-over-year to $42.5 million from $35.0 million. The company noted that the revenue growth came during what is historically RFG’s slowest quarter and is principally attributable to increased sales of cut-fruit and vegetables, as well as deli products. RFG gross margin in the most recent quarter totaled $3.3 million, equal to 7.7 percent of segment sales, which compares with $2.5 million, or 7.2 percent of segment sales in the corresponding fiscal 2012 period. Year-over-year improvement in gross margin reflects primarily operating efficiencies resulting from unit-volume gains.
First-quarter gross margin rose 10 percent to $13.1 million, or 9.4 percent of total sales, from $11.9 million, or 10.1 percent of total sales, in the prior period one year ago. Income from operations in the most recent quarter totaled $4.3 million, a modest decrease from $4.4 million in the initial period one year ago.
Calavo
