Calavo Growers, Inc. Reports Strong Fiscal First Quarter Results; Global Avocado Leader Posts 60 Percent Quarterly Gain In Net Income.

Business Editors

SANTA ANA, Calif.--(BUSINESS WIRE)--March 3, 2003

Gross Margins Jump Nearly 10% Year-Over-Year

Calavo Growers, Inc. (Nasdaq:CVGW), a worldwide leader in packing and distributing avocados, processed avocados and other perishable food products, announced today that first quarter fiscal 2003 net income increased more than 60 percent despite a modest decrease in revenues, resulting in part from the Mexfly quarantine affecting portions of the Southern California avocado growing area.

For the three months ended January 31, 2003, net income increased by 60.3 percent to $500,000 from $312,000 posted in the corresponding period a year ago. Earnings per share in the most recent quarter totaled $0.04 on a basic and diluted basis versus $0.03 basic and diluted in the first quarter of fiscal 2002. Per share figures for the recent quarter are based on approximately 23 percent higher weighted-average shares outstanding, owing partially to the company's successful subscription rights offering completed in August 2002.

Reflecting Calavo's ongoing program of cost containment and achieving operating efficiencies, first quarter gross margins improved by nearly 10 percent, or $342,000, to $3.9 million dollars from approximately $3.6 million one year ago. Fiscal 2003 first quarter net sales approximated $44.2 million, dipping about $1.5 million or three percent, from $45.7 million in the like period last year, owing in part to the aforementioned Mexfly quarantine affecting avocados grown in Valley Center, Calif.

First quarter revenues -- indicative of the cyclically slower seasonality of fruit grown in California -- benefited from sharp growth in sales of international avocados sourced from Mexico and Chile, which rose nearly 15 percent year over year and "worked to significantly offset the impact of the smaller volume of California avocados harvested by growers," according to Lee E. Cole, Calavo's chairman, president and chief executive officer.

Cole stated, "Calavo's fiscal first quarter operating results are very solid and gratifying. The Company was able to achieve strong net income growth in spite of the Mexfly quarantine, which is impacting the entire California avocado industry, by carefully managing our costs and through diversified sources of avocados.

"Moreover, our fiscal quarter results benefited from Calavo's global business strategy: with diversified sources of fresh avocados from California and international markets, the company is able to weather seasonality and other unexpected changes in the California avocado harvest," he said.

Regarding Calavo's balance sheet, which is strong, Cole pointed out that at January 31, 2003, "shareholder equity had increased about five percent, or more than $1.5 million, to $32.1 million from $30.6 million at fiscal-year end. Additionally, on January 2, 2003, we paid our annual cash dividend of $0.20 per share, indicative of the company's commitment to delivering shareholder returns."

California Avocados

For the first quarter of fiscal 2003, Calavo marketed 42.9 percent of all first grade Hass variety avocados harvested in California versus 39.7 percent for the same prior-year period. Despite this increase in market share, the business delivered only $12.2 million in revenues as compared to $17.2 million in the prior year period reflecting a 22.8 percent or 4.9 million pound decrease in the volume of avocados delivered.

Gross margins decreased to $0.7 million from $1.0 million, reflecting diminished efficiencies in operations due to the smaller volume of avocados handled at our packing operations. Despite this weaker performance of the California avocado business, the company remains confident in its fundamentals and the value-added services it can deliver to retailers and customers using its bagging and ripening techniques.

International Avocados and Perishable Food Products

Sales generated by the international avocados and perishable food products segment increased to $28.3 million for the first quarter as compared to $24.7 million for the same prior-year period. This increase reflects a 4.6 and 2.3 million pound increase in, respectively, Chilean and Mexican grown avocados marketed by Calavo during this first fiscal quarter as compared to the same prior-year period. The increase in volume was partially offset by decreased prices in the marketplace for imported avocados.

Gross margins generated by the business also increased from $1.3 million to $1.8 million. The gross profit percentage also increased slightly from 5.4 percent to 6.4 percent, reflecting the improved efficiencies of packing a larger volume at the company's Uruapan, Mexico packinghouse and marketing a greater volume of Chilean avocados.

Processed Products

Third-party processed product sales totaled $5.5 million as compared to $5.6 million for the same prior year period. Initial response to the company's introduction of a new line of refrigerated high-pressure produced product has been gratifying. Included in the first quarter are net sales of almost $170,000 representing sales of this newly introduced product.

Despite flat sales, the company increased gross margins generated by the business to $1.5 million as compared to $1.3 million for the same prior year period. This increase comes principally as a result of sales of processed avocado products produced with lower cost avocado pulp.

Second Quarter Outlook

Moving forward, Cole said, "Calavo continues to feel confident on the strategy we have embarked on for each of our businesses. We anticipate an increased volume of California avocados through our packinghouses in the second quarter as growers increase their seasonal harvest and begin delivering avocados from the Mexfly quarantine areas. In addition, we expect continuing growth generated by our Mexican avocado packing and import business, offset by a seasonal decline in our Chilean avocado sales.

"As previously reported, our processed operations will relocate to a newly acquired facility in Uruapan, Mexico. During the relocation, we will remain focused on mitigating unnecessary costs and ensuring that charges related to the restructuring are minimized. We hope to be able to complete the relocation in a period of six to nine months," Cole concluded.

About Calavo

Calavo Growers, Inc. engages in the procurement and marketing of avocados and other perishable foods and the preparation and distribution of processed avocado products. Calavo's expertise in marketing and distributing avocado, processed avocado, 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 worldwide 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, 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, 2002. 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 STATEMENTS OF INCOME (UNAUDITED)
         (All amounts in thousands, except per share amounts)

                                                 Three months ended
                                                      January 31,
                                                    2003        2002

Net sales                                          $44,229    $45,723
Cost of sales                                       40,306     42,142
Gross margin                                         3,923      3,581
Selling, general and administrative                  3,191      3,024
Operating income                                       732        557
Other income, net                                      115          8
Income before provision for income taxes               847        565
Provision for income taxes                             347        253
Net income                                            $500       $312
Net income per share:
 Basic                                               $0.04      $0.03
 Diluted                                             $0.04      $0.03
Number of shares used in per share computation:
 Basic                                              12,856     10,466
 Diluted                                            12,887     10,466


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

                                                    January   October
                                                       31,       31,
                                                      2003      2002
Assets
Current assets:
   Cash and cash equivalents                           $123      $921
   Accounts receivable, net of allowance for
    doubtful accounts of $44 (2003) and $25 (2002)   17,466    17,907
   Inventories, net                                  14,507    12,461
   Prepaid expenses and other current assets          3,773     3,945
   Loans to growers                                     689       467
   Advances to suppliers                                100     2,535
   Income taxes receivable                              316       225
   Deferred income taxes                              1,252     1,252
      Total current assets                           38,226    39,713
Property, plant, and equipment, net                   9,511     9,497
Investments held to maturity                          2,006     1,979
Other assets                                          4,482     3,943
                                                    $54,225   $55,132

Liabilities and shareholders' equity
Current liabilities:
   Payable to growers                                $8,011    $6,368
   Trade accounts payable                               904     1,708
   Accrued expenses                                   6,215     7,015
   Short-term borrowings                              3,400     3,000
   Dividend payable                                      --     2,567
   Current portion of long-term obligations              81       222
      Total current liabilities                      18,611    20,880
Long-term liabilities:
   Long-term obligations, less current portion        2,995     3,180
   Deferred income taxes                                516       516
      Total long-term liabilities                     3,511     3,696
Commitments and contingencies
Total shareholders' equity                           32,103    30,556
                                                    $54,225   $55,132