Calavo Growers, Inc. Announces Fiscal 2005 First-Quarter Operating Results.

SANTA ANA, Calif. -- Calavo Growers, Inc. (NASDAQ:CVGW), the global leader in the packing and marketing of fresh and processed avocados and other perishable food products, today reported a net loss for the fiscal 2005 first quarter of $1.5 million, equal to $0.11 per diluted share, on lower revenues of $47.7 million, which were constrained by a smaller volume of California fruit due to severe winter storms and an unanticipated surge in seasonal imports from Chile during the period. Results for the three months ended January 31, 2005, compare with a net loss of $294,000, or $0.02 per diluted share, on revenues of $49.0 million in last year's first quarter.

"While the fiscal first quarter is historically our smallest, the results in the most recent period fall well beneath our expectations," said Calavo Chairman, President and Chief Executive Officer Lee E. Cole. "Near-record rainfall that buffeted California in December and January significantly impacted the early avocado harvest and resulted in a 20-plus percent drop in segment sales year-over-year. In concert with the sharp, unanticipated rise in first-quarter fruit imports from Chile, which exerted considerable pricing pressure, these two factors held down Calavo's revenue during the period.

"With the Chilean growing season over and the delivery of California avocados to our packinghouses beginning to gain speed, I am confident that the picture of our operating performance will look quite different in the fiscal second and third quarters, and we anticipate a return to solid profitability," he said.

In addition to the impact of lower sales, Cole stated that the nearly $0.9 million before-tax effect of a series of unique items accounts for the predominant portion of the difference in the company's bottom line from last year's first period. Specifically, the Calavo CEO referenced a confluence of factors that included, most significantly, nearly $425,000 in unusual sales, general and administrative (SG&A) expenses during the period, the majority of which are related to implementing provisions required under Section 404 of the Sarbanes-Oxley Act (SOX).

"Calavo has always placed precedence on good governance and the transparency of its financial statements but without question, the cost of implementing the SOX provisions to a company our size is substantial and will have an impact on operating results in the near term," said Cole.

During the most recent quarter, the company also incurred final expenses of $437,000 related to the closing of its former processed product manufacturing facility in Mexicali, Baja California Norte, Mexico, and which are accounted for in cost of sales ($298,000) and SG&A ($139,000), respectively. Cole said that with the restructuring of processed operations complete, "Calavo can now turn its full focus on building revenues in this promising segment and realizing the considerable benefits and cost savings afforded by our new plant in Uruapan, Michoacan, Mexico."

California Avocados

Sales of California avocados fell by $2.1 million in the first quarter of fiscal 2005 to $8.1 million from $10.2 million in the corresponding period last year. Volume of fresh California fruit sold in the first period dropped 21 percent year-to-year. Despite the smaller volume of California avocados, domestic price per pound remained materially unchanged as a result of an unexpectedly large seasonal crop of avocados imported from Chile discussed below.

International Avocados and Perishable Food Products

First-quarter sales in the international avocado segment totaled $33.8 million, an increase of $1.0 million from $32.8 million in the like period one year earlier. First-period volume of fruit sourced from both Mexico and Chile rose significantly from the fiscal 2004 first period. The company stated that the first-quarter surge in Chilean avocado imports flooded the market and considerably impacted per-pound prices of California and Mexican-grown fruit. The International Avocado and Perishable Food Products segment accounted for approximately 71 percent of total first-quarter company sales, indicative of Calavo's successful diversification strategy and ability to generate significant revenue streams beyond its core domestic business unit.

Processed Products

For the fiscal 2005 first quarter, processed segment sales totaled $5.7 million, which compares with $6.0 million posted in the same period last year. The company's ultra-high pressure guacamole accounted for 23 percent of segment sales in the most recent period, as compared with 17 percent in the like quarter last year, demonstrating the increasing popular acceptance of the product. During the first quarter, the company expanded retail distribution for the ultra-high pressure product through the addition of the Stater Bros. grocery chain, which will sell the guacamole under the Calavo label.

Summary and Second-Quarter Outlook

Cole stated: "As Calavo moves ahead into the second quarter, the company's operating performance will benefit from increased packing volume in its California Avocado operations as the seasonal harvest gains velocity. Additionally, we are well positioned -- and anticipate -- to increase the amount of Mexican fruit packed, following the United States Department of Agriculture's rule change allowing the 12-month import to nearly all states, which went into effect last month. The permitted year-round import will help ensure a consistent 12-month supply, offset any cyclical downturns in the California crop and satisfy growing consumer demand.

"Longer term, we remain focused on implementing our aggressive agenda of strategic initiatives that, over time, will result in a larger, more broadly based Calavo. The company possesses the market leadership and necessary resources -- both financial and infrastructure -- to successfully implement its strategic plan. While growth may not occur in a steady upward arc -- and is subject to cyclical inconsistencies and market conditions of operating a global agribusiness -- we are extremely confident in our direction and believe it will result in resumed strong performance that will translate to increased shareholder value," he concluded.

About Calavo

Calavo Growers, Inc. is a worldwide leader in the procurement and marketing of fresh avocados and other perishable foods, as well as the manufacturing and distribution of processed avocado products. Founded in 1924, Calavo's expertise in marketing and distributing avocados, processed avocados and other perishable foods allows the company to deliver a wide array of fresh and processed food products to food distributors, produce wholesalers, supermarkets and restaurants on a global basis.

Safe Harbor Statement

This news release contains statements relating to future events and results of Calavo (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: increased competition, conducting substantial amounts of business internationally, pricing pressures on agricultural products, adverse weather and growing conditions confronting avocado growers and new governmental regulations, as well as other risks and uncertainties detailed from time to time in the company's Securities and Exchange Commission filings, including, without limitation, the company's Report on Form 10-K for the year ended October 31, 2004. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

CALAVO GROWERS, INC.
           CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
         (All amounts in thousands, except per share amounts)

                                        January 31,       October 31,
                                            2005              2004

Assets

Current assets:
 Cash and cash equivalents                 $    511          $    636
 Accounts receivable, net of allowances
  of $1,228 (2005) and $1,087 (2004)         18,728            21,131
 Inventories, net                            11,273            11,375
 Prepaid expenses and other current
  assets                                      4,757             4,598
 Loans to growers                               246               209
 Advances to suppliers                          248             2,413
 Income taxes receivable                      1,699               803
 Deferred income taxes                        1,775             1,775
  Total current assets                       39,237            42,940

Property, plant and equipment, net           17,365            17,427
Building held for sale                        1,658             1,658
Goodwill                                      3,591             3,591
Other assets                                  1,589             1,782
                                           $ 63,440          $ 67,398

Liabilities and shareholders' equity

Current liabilities:
 Payable to growers                        $  2,784          $  5,789
 Trade accounts payable                       2,245             2,490
 Accrued expenses                            12,127             8,234
 Short-term borrowings                        3,000             2,000
 Dividend payable                                --             4,052
 Current portion of long-term obligations        21                22
  Total current liabilities                  20,177            22,587

Long-term liabilities:
 Long-term obligations, less current
  portion                                        20                34
 Deferred income taxes                          840               840
  Total long-term liabilities                   860               874

Total shareholders' equity                   42,403            43,937
                                           $ 63,440          $ 67,398


                         CALAVO GROWERS, INC.
      CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
         (All amounts in thousands, except per share amounts)

                                               Three months ended
                                                   January 31,
                                             2005              2004

Net sales                                  $ 47,671          $ 49,043
Cost of sales                                45,719            45,959
Gross margin                                  1,952             3,084
Selling, general and administrative           4,513             3,687
Operating loss                               (2,561)             (603)
Other income, net                                82               114
Loss before benefit for income taxes         (2,479)             (489)
Benefit for income taxes                       (932)             (195)
Net loss                                   $ (1,547)         $   (294)
Net loss per share:
 Basic                                     $  (0.11)         $  (0.02)
 Diluted                                   $  (0.11)         $  (0.02)
Number of shares used in per share
 computation:
 Basic                                       13,507            13,469
 Diluted                                     13,507            13,469