Calavo Growers, Inc. Reports Profitable Fiscal Third-Quarter and Nine-Month Results.SANTA ANA Santa Ana, city, El Salvador Santa Ana (sän'tä ä`nä), city (1993 pop. 129,873), W El Salvador. It is the second largest city in the country and the commercial and processing center for a sugarcane, coffee, and cattle region. , Calif. -- Calavo Growers Growers are the people, animals, plants, and various living creatures that assist in the growing of plants and other living creatures. More specifically, the term "growers" refers to individual people who put forth effort to grow plants for food and medicinal use, including the , Inc. (Nasdaq:CVGW): --Quarterly Sales Reach Highest Single-Period Total in Company History --Nine-Month Sales Rise 14 Percent Year-to-Year, A New Record --Uruapan, Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , Processed Plant Completes First Full Quarter of Operation Calavo Growers, Inc. (Nasdaq:CVGW), the global leader in packing and distributing fresh and processed avocados and other perishable per·ish·a·ble adj. Subject to decay, spoilage, or destruction. n. Something, especially foodstuff, subject to decay or spoilage. Often used in the plural. fruit products, today reported fiscal 2004 third-quarter and nine-month operating results. For the three months ended July July: see month. 31, 2004, net revenues climbed to $83.3 million, the highest quarterly total in company history, up from $81.4 million in the like period of fiscal 2003. Third-quarter net income approximated $3.1 million, equal to $0.23 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. This compares with net income of $3.2 million, or $0.25 per fully diluted share, in the year-earlier third quarter. Per share results for the recently concluded quarter are based on approximately four percent greater shares outstanding than in last year's third quarter, in part due to Calavo's all-stock acquisition of Maui Maui (mou`ē), island (1990 est. pop. 82,500), 728 sq mi (1,886 sq km), second largest island in the state of Hawaii, separated from the island of Hawaii by the Alenuihaha Channel and from Molokai by the Pailolo Channel. Fresh International completed in November November: see month. 2003. Calavo stated that its profitable financial results in the recently concluded quarter are principally attributable "to a strong performance in the company's California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). avocado avocado (ä`vəkä`do, ăv`–), tropical American broad-leaved evergreen tree of the genus Persea of the family Lauraceae (laurel family). segment, which experienced significant volume growth." The company reported that increased sales from the International avocados and perishable food products (International) segment also contributed to third-quarter revenue growth. As a result of the sales expansion in the International operating segment, net revenues for the first nine months of fiscal 2004 increased 14 percent to a record $208.8 million, from $183.0 million in the corresponding period one-year adj. 1. completing its life cycle within a year. Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants earlier. Nine-month net income was $5.1 million, equivalent to $0.38 per fully diluted share, which compares with $5.5 million, or $0.42 per diluted share, in the corresponding period one year earlier. Lee E. Cole, chairman, president and chief executive officer, stated: "Calavo's focused approach to implementing its strategic operating agenda enabled the company to complete another successful quarter and nine months. The company continues to gain sales momentum, as reflected by our record revenues for the three and nine-month periods, and to make notable progress on a range of initiatives intended to anchor future growth and profitability." Specifically, Cole referenced advances made along several business fronts, including: --A significant increase in third-quarter volume of fresh California avocados compared to the prior year, due to a significantly larger domestic crop. The company estimates its quarter-to-date share of the California avocado market totaled 33.4 percent, which represents an increase from the prior year, which was 31.7%. --Increased growth from International segment sales, including continued robust demand from the Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and market. --The first full quarter of operation of the company's new, 90,000-plus-square-foot processed-products manufacturing facility in Uruapan Uruapan (  rwä`pän), city (1990 pop. 187,623), Michoacán state, W Mexico. An attractive city with gardens and parks, it is in a semitropical, mountainous agricultural region. , Michoacan, Mexico, which opened in February February: see month. 2004."With respect to the new facility," Cole said, "while third-quarter sales in the Processed Products segment fell beneath plan, we continue to gain efficiencies, and to build inventories to levels at which we can satisfy customer demand. "Simply put, we believe this new plant will ultimately bring unprecedented efficiencies to our processed unit. However, this process is taking longer then anticipated," Cole stated. Turning to Calavo's commitment to cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. , Cole stated that selling, general and administrative expenses decreased by nearly four percent from last year's third quarter, and are virtually unchanged for the nine-month period. "We view our ability to control SG&A -- even as Calavo mounts ambitious initiatives, like the Uruapan processing facility, and contends with higher employee salary and benefit costs -- as testament to a rigorous discipline of holding the line on costs that is central to the company mindset mind·set or mind-set n. 1. A fixed mental attitude or disposition that predetermines a person's responses to and interpretations of situations. 2. An inclination or a habit. ," Cole said. The Calavo balance sheet remains "strong and virtually free of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. ," Cole added. At July 31, 2004, shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. totaled $46.9 million, an increase of 26 percent from $37.1 million at the end of fiscal 2003. California Avocados California avocado sales of $66.7 million were $1.2 million, or 1.8 percent, below the $67.9 million in last year's fiscal third period. The decrease in sales reflects lower average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. , partially offset by a significantly larger number of units sold. International International segment sales increased 110 percent to $9.8 million, a jump of $5.1 million from $4.7 million in the third quarter of fiscal 2003. This increase is principally due to sales from the company's tropical fruit and specialty products. Processed Products Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight in the processed products segment fell 23 percent to $6.8 million from $8.8 million in the comparable quarter one year ago. The factors impacting the business unit's performance are thought by management to be transitional in nature. Sales were adversely affected as inventory levels were not adequate to meet processed-product customer demand. Fourth-Quarter Outlook "We are proceeding into the fourth quarter with increasing momentum and a sense of confidence about our business units," said Cole. "The California Avocado segment is expected to continue yielding robust volume, particularly when measured against last year's seasonally lower domestic crop. "International segment sales are expected to remain strong for the remainder of the fiscal year," he continued. "The outlook for our Processed Products segment is positive due to the substantial elimination of the use of co-packers, the expected closing of our Mexicali Mexicali (māhēkä`lē), city (1990 pop. 438,377), capital of Baja California state, NW Mexico, across the border from Calexico, Calif. operations, and the increased levels of inventory to service customer demand. We expect continued progress from our processed products segment, but have no illusions about this occurring overnight and expect that the greatest gains may not be evident until next fiscal year." About Calavo Calavo Growers, Inc. is a worldwide leader in the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. and marketing of fresh and processed avocados, as well as other perishable food products. Founded in 1924 and headquartered in Santa Ana, Calavo is the First Name in Avocados(TM) and markets its products to food distributors, produce wholesalers, supermarkets and restaurants on a global basis. On Nov. 7, 2003, the company completed its acquisition of privately held Maui Fresh International, a multi-line marketer of specialty produce, including tropical fruits and vegetables. With a reputation for quality, Maui Fresh operates as a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Calavo and markets products under its respected brand name. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This news release contains statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future events and results of Calavo (including certain projections and business trends) that are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended Oct. 31, 2003. These forward-looking statements are made only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , 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)
July 31, October 31,
2004 2003
------------------ ------------------
Assets
Current assets:
Cash and cash equivalents $848 $5,375
Accounts receivable, net of
allowances of $1,476 (2004)
and $700 (2003) 27,749 16,560
Inventories, net 13,759 8,021
Prepaid expenses and other
current assets 4,135 4,487
Loans to growers 65 353
Advances to suppliers 2,396 624
Deferred income taxes 1,379 1,379
------------------ ------------------
Total current assets 50,331 36,799
Property, plant and equipment,
net 16,857 13,121
Goodwill 3,591 --
Other assets 3,996 3,769
------------------ ------------------
$74,775 $53,689
================== ==================
Liabilities and shareholders'
equity
Current liabilities:
Payable to growers $14,949 $3,446
Trade accounts payable 2,930 1,534
Accrued expenses 8,068 7,777
Income taxes payable 1,138 51
Dividend payable -- 3,232
Current portion of long-term
obligations 23 24
------------------ ------------------
Total current liabilities 27,108 16,064
Long-term liabilities:
Long-term obligations, less
current portion 37 61
Deferred income taxes 764 417
------------------ ------------------
Total long-term
liabilities 801 478
Total shareholders' equity 46,866 37,147
------------------ ------------------
$74,775 $53,689
================== ==================
CALAVO GROWERS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts)
Three months ended Nine months ended
July 31, July 31,
-------------------- -------------------
2004 2003 2004 2003
----------- -------- --------- ---------
Net sales $83,318 $81,359 $208,782 $182,981
Cost of sales 74,833 72,203 189,389 162,931
----------- -------- --------- ---------
Gross margin 8,485 9,156 19,393 20,050
Special charges -- 5 -- 103
Selling, general and
administrative 3,777 3,919 11,504 11,240
----------- -------- --------- ---------
Operating income 4,708 5,232 7,889 8,707
Other income, net (91) (294) (311) (615)
----------- -------- --------- ---------
Income before provision for
income taxes 4,799 5,526 8,200 9,322
Provision for income taxes 1,739 2,287 3,100 3,848
----------- -------- --------- ---------
Net income $3,060 $3,239 $5,100 $5,474
=========== ======== ========= =========
Net income per share:
Basic $0.23 $0.25 $0.38 $0.42
=========== ======== ========= =========
Diluted $0.23 $0.25 $0.38 $0.42
=========== ======== ========= =========
Number of shares used in per
share computation:
Basic 13,507 12,930 13,494 12,905
=========== ======== ========= =========
Diluted 13,594 12,960 13,579 12,935
=========== ======== ========= =========
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