Calavo Growers Posts Higher Fiscal 2006 Second Quarter Operating Results.SANTA PAULA Santa Paula (săn`tə pôl`ə), city (1990 pop. 25,062), Ventura co., S Calif., on the Santa Clara River in a fertile valley that yields citrus fruits, avocados, vegetables, flowers, nursery products, and walnuts; laid out 1875, inc. , 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 Highlights Include: --Revenues Climb 12 Percent to $67.4 Million --Gross Margin Surges to $8.7 Million, a 36 Percent Jump --Operating Income Leaps 76 Percent to $3.6 Million from $2.0 Million --Net Income Totals $2.2 Million Versus $1.5 Million (Before Gain on Sale of Building, Net of Tax, of $1.0 Million) --California Avocado avocado (ä`vəkä`do, ăv`–), tropical American broad-leaved evergreen tree of the genus Persea of the family Lauraceae (laurel family). Packing Volume Doubles Year-to-Year --Processed-Product Segment Sales, Margin Expand Sharply Calavo Growers, Inc. (Nasdaq:CVGW), a global leader in the packing and marketing of 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. food products, today reported significantly improved results for its fiscal 2006 second quarter, with 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 , gross margin and profit from operations rising sharply year over year. For the three months ended April 30, 2006, net income reached $2.2 million, equal to $0.15 per 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, which compares with $1.5 million, or $0.10 per diluted share, before giving effect to a $1.0 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain ($1.7 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ) from the sale of a building, recorded in the corresponding period last year. After accounting for the benefit from the sale of the company's former headquarters in 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., net income in the fiscal 2005 second quarter totaled $2.5 million, or $0.18 per diluted share. Net sales in the most recent quarter grew 12 percent to $67.4 million from $60.2 million one year earlier, propelled by higher revenues in both the company's fresh and processed-product business segments. (During the second quarter of fiscal 2006, the Company combined its 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). Avocados reporting segment with its International Avocados and Perishable Food Products segment to form one combined segment, Fresh Products.) Second period gross margin surged 36 percent to $8.7 million from $6.4 million in the like quarter of 2005, owing primarily to economies of scale resulting from cyclically larger California avocado volume and increased operating efficiencies at its processed products manufacturing facility, in addition to higher sales in that business segment. "The company's solidly profitable second quarter performance reflects focused execution of Calavo's strategic business agenda," said Chairman and Chief Executive Officer Lee E. Cole, "and is punctuated by a 76 percent leap in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. to $3.6 million, as compared with $2.0 million in the corresponding period of fiscal 2005. We are extremely pleased by our quarterly and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating results, which validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data several key corporate initiatives, most notably Calavo's state-of-the-art processed facility constructed 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 and opened in early
2005."Chief among factors favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacting operating performance, Cole stated that processed-product segment revenues in the most recent period rose approximately $4.7 million, or 39 percent, fueled by high demand in both the retail and food-service sectors for Calavo's ultra-high-pressure guacamole. Second-quarter gross margins in the segment nearly doubled, increasing approximately $1.5 million from one-year earlier, as production efficiency continued to improve. "The trend lines in our processed-product business unit continue upward measured year-to-year," he stated. Net sales for the six months ended April 30, 2006 reached $118.1 million, a ten percent advance from $107.9 million in the like period one year ago. First-half gross margin jumped to $12.1 million, or 45 percent, from $8.3 million in the initial six months of fiscal 2005. Year-to-date income from operations swung nearly $3.1 million, or more than six-fold, to $2.6 million from a loss of $0.5 million in the fiscal 2005 first half. Fiscal 2006 first-half net income totaled $1.5 million, or $0.11 per diluted share, as compared with a net loss of $0.1 million, equal to $0.01 per diluted share, before giving effect to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. gain on sale of building of $1.0 million ($1.7 million pre-tax), or $0.08 per diluted share, in last year's second period. After giving effect to this item, first-half fiscal 2005 net income equaled $0.9 million, or $0.07 per diluted share. Cole indicated that fiscal 2006 sales are being paced, in part, by a cyclically larger California avocado crop, which resulted in second-quarter fruit volume through the company's packinghouses rising more than twofold from last year. "The substantially larger California avocado harvest this year is greatly benefiting production costs through our scale-driven operations," the Calavo CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated. "As a result of this volume, we moderated import of Mexican-grown fruit in the second period," Cole said, "to supplement availability of select avocados in the marketplace." Outlook Moving Forward Looking ahead, Cole said that he views the second half of fiscal 2006 "with great anticipation. We enter the third quarter from a very solid position--operationally and financially. The large California harvest bodes well for our domestic packinghouses, which thrive on volume and traditionally receive their greatest amount of avocados during the third period. Additionally, the California harvest shifts northward north·ward adv. & adj. Toward, to, or in the north. n. A northern direction, point, or region. north as the year progresses into regions in which Calavo enjoys its largest market share--another boon Boon A general term that refers to a benefit or improvement for investors. This can include such things as increased dividends, a stock market rally and stock buybacks. Notes: to productivity." He continued, "Processed operations will continue to contribute solidly, and we are focused on further growing revenues of both high-pressure guacamole and our line of frozen products. We feel that there is considerable untapped upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside in the processed-products business segment. Near term, we expect the division to benefit from continued production efficiencies and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. fruit prices. "We anticipate maintaining solid profitability in the third period. The balance of the fiscal year continues to look promising as we focus on executing key initiatives and our strategic business agenda" Cole concluded. About Calavo Growers, Inc. Calavo Growers, Inc. is the 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 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 products enables it to serve food distributors, produce wholesalers, supermarkets and restaurants on a global basis. 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" 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, 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 Annual 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 October 31, 2005. These 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. 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)
April 30, Oct. 31,
2006 2005
--------- ---------
Assets
Current assets:
Cash and cash equivalents $287 $1,133
Accounts receivable, net of allowances
of $2,741 (2006) and $2,688 (2005) 30,162 19,253
Inventories, net 10,502 10,096
Prepaid expenses and other current assets 5,242 5,879
Advances to suppliers 255 1,141
Income tax receivable -- 893
Deferred income taxes 2,651 2,651
--------- ---------
Total current assets 49,099 41,046
Property, plant, and equipment, net 17,666 16,897
Investment in Limoneira 41,486 45,634
Goodwill 3,591 3,591
Other assets 2,383 1,314
--------- ---------
$114,225 $108,842
========= =========
Liabilities and shareholders' equity
Current liabilities:
Payable to growers $10,428 $1,753
Trade accounts payable 1,742 1,892
Accrued expenses 14,413 12,482
Income tax payable 42 --
Short-term borrowings 4,354 1,424
Dividend payable -- 4,564
Current portion of long-term obligations 1,309 1,313
--------- ---------
Total current liabilities 32,288 23,428
Long-term liabilities:
Long-term obligations, less current portion 11,715 11,719
Deferred income taxes 6,944 8,589
--------- ---------
Total long-term liabilities 18,659 20,308
Total shareholders' equity 63,278 64,746
--------- ---------
$114,225 $108,842
========= =========
CALAVO GROWERS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts)
Three months ended Six months ended
April 30, April 30,
----------------- -------------------
2006 2005 2006 2005
-------- -------- --------- ---------
Net sales $67,429 $60,206 $118,076 $107,877
Cost of sales 58,768 53,851 106,005 99,570
-------- -------- --------- ---------
Gross margin 8,661 6,355 12,071 8,307
Selling, general and
administrative 5,063 4,307 9,507 8,820
-------- -------- --------- ---------
Operating income (loss) 3,598 2,048 2,564 (513)
Other income (expense), net 10 1,909 (65) 1,991
-------- -------- --------- ---------
Income before provision for
income taxes 3,608 3,957 2,499 1,478
Provision for income taxes 1,419 1,490 975 558
-------- -------- --------- ---------
Net income $2,189 $2,467 $1,524 $920
======== ======== ========= =========
Net income per share:
Basic $0.15 $0.18 $0.11 $0.07
======== ======== ========= =========
Diluted $0.15 $0.18 $0.11 $0.07
======== ======== ========= =========
Number of shares used in per
share computation:
Basic 14,282 13,507 14,317 13,507
======== ======== ========= =========
Diluted 14,343 13,580 14,374 13,581
======== ======== ========= =========
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