Calavo Growers Registers Continued Solid Profitability in Fiscal 2006 Third Quarter.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 (Nasdaq:CVGW): Financial Highlights Include: --Nine Months' Net Income Climbs 57% Before 2005 Asset Sale, as 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. Jumps 94% --Strong Profitability Continues in Third Quarter Despite Lower Revenues --Processed-Product Segment Sales, Gross Profit and Gross Margin Continue to Surge; Segment Gross Margin Leaps 124% and 134%, Respectively, in Third Quarter and Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. --Calavo Invests in Expanding Ultra-High-Pressure Guacamole Production and its Popular ProRipe VIP Program 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 continued strong profitability in the third quarter despite a decrease in quarterly revenues of approximately $9.7 million as compared to the corresponding period in fiscal 2005. For the nine months, the company registered sharp gains in gross margin, operating income and net income, before considering last year's asset sale, on revenues that were slightly higher versus the like period in the prior year. For the quarter ended July 31, 2006, net income totaled $2.9 million, virtually unchanged from the corresponding period in the prior year. Basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of on slightly more shares outstanding were $0.20, compared with $0.21 in fiscal 2005. 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 for the quarter were $79 million, compared with a record $88.7 million in the year-earlier period. Decreased revenues from fresh products more than offset sharply higher sales in the processed-product segment. Gross margin climbed to a record $10.2 million from $9.2 million a year ago, reflecting higher sales in the processed segment, as well as the impact of increased 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). volume on packinghouse efficiencies and improved efficiencies at the processed-products manufacturing facility. For the nine months, net income rose to $4.5 million, equal to $0.31 per basic and 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, compared with $2.8 million, or $0.20 per share, before giving effect to a $1.0 million after-tax gain ($1.7 million pre-tax) 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., recorded in the second quarter of fiscal 2005. After giving effect to this transaction, net income for the fiscal 2005 nine months amounted to $3.8 million, equal to $0.28 per basic and diluted share. Nine-month revenues totaled $197 million, virtually unchanged from $197 million in the fiscal 2005 like period. Gross profit for the nine months increased 27% to $22.3 million from $17.5 million in the previous period. Operating income grew 94% to $7.5 million from $3.9 million one year earlier. Lee E. Cole, chairman, president and 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. , commented: "It is highly gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. that Calavo continued to record solid profitability in the most recent quarter and was able to match the very strong net income performance of fiscal 2005's third quarter. This achievement resulted from our ability to successfully implement our focused business strategy and capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. Calavo's growing strength, diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. and leadership market position." Cole noted that California fresh avocado volume advanced by 60% during the current year's third quarter, when compared to the same period fiscal 2005, with the company packing 22 million more pounds of fruit. However, primarily due to plentiful plen·ti·ful adj. 1. Existing in great quantity or ample supply. 2. Providing or producing an abundance: a plentiful harvest. supply, prices declined approximately 42% during the most-recent period versus last year's third quarter. The drop in price was the primary factor that contributed to Calavo's net decrease in revenues related to California avocados during the third quarter versus the same period in fiscal 2005. "While pricing pressures created a challenging environment," Cole continued, "it should be emphasized that Calavo responded effectively to the challenge, as our growing sales and distribution strength enabled us to successfully market an additional 22 million pounds of fresh avocados. Additionally, let me stress a key point for our industry -- demand for our products continues to expand, along with growing interest and awareness of avocados, both fresh and processed." According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Calavo CEO, the company's processed business continues to surge, fueled by sales of Calavo's ultra-high-pressure guacamole, which is enjoying robust demand and expanding distribution in both the food service and retail business segments. "We have an outstanding product," Cole commented, "and have witnessed strong processed-segment sales growth on both a sequential and year-over-year basis for the past four consecutive quarters as we continue to build distribution and expand capacity." Ultra-high-pressure guacamole accounted for 38% of total processed gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. in the third quarter, up sharply from 26% in the corresponding quarter a year ago. As sales of this product increase to food service operators, the company benefits from a "tag along tag along Verb to accompany someone, esp. when uninvited: I tagged along behind the gang Verb 1. " effect as they purchase more of the company's other processed products in addition. Processed pricing remains "firm and stable," Cole added. With ongoing important additions to Calavo's ultra-high-pressure guacamole customer roster, Cole reported that the company has invested in another large processing machine, which will significantly expand capacity when operational. On the subject of capital expenditures, he continued: "We are also investing in the expansion of our ProRipe VIP program. We plan to expand our VIP ripening ripening said of meat. See curing. program in New Jersey and Texas distribution centers, which, along with Santa Paula, will enable us to serve customers nationwide with avocados preconditioned pre·con·di·tion n. A condition that must exist or be established before something can occur or be considered; a prerequisite. tr.v. to customer specifications. Our VIP program, recently heralded as best in class by a customer, facilitates avocado sales and spurs demand, as the consumer greatly appreciates the convenience of pre-ripened fruit." Looking Ahead: Fourth Quarter and Longer Term Cole concluded: "By all indications, the fourth period of business will be a strong one for our company with record quarterly levels of fruit moving through our California packinghouses, which will help us achieve additional efficiencies and economies-of-scale. In fact, the company packed approximately 28 million pounds of fresh California avocados in August alone, just the first month of the quarter, which is double the amount of fruit packed during the entire fourth period of fiscal 2005. While fruit pricing of our California avocados remains a variable, we're encouraged by some improvement in recent weeks. On balance, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about prospects for higher fourth quarter revenues and profits. "Looking longer term, we're convinced Calavo has enormous and exciting business opportunities for further growth and profitability. We have really just begun to scratch the surface of the processed business. The avocado continues its ascension Ascension, in Christianity Ascension, name usually given to the departure of Jesus from earth as related in the Gospels according to Mark (16) and Luke (24) and in Acts 1.1–11. in popularity, and we are more focused and determined than ever on truly being the global force in this business. "We have built the financial strength, the infrastructure, the talented team, the market position and the industry leadership to support our ambitious plans. As we execute our focused strategy, we remain dedicated to our primary objective of building long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholder value." 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 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 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 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, except per share amounts)
July 31, October 31,
2006 2005
--------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 107 $ 1,133
Accounts receivable, net of
allowances of $2,327 (2006) and
$2,688 (2005) 30,749 19,253
Inventories, net 10,743 10,096
Prepaid expenses and other current
assets 5,113 5,879
Advances to suppliers 161 1,141
Income tax receivable -- 893
Deferred income taxes 2,651 2,651
--------------- --------------
Total current assets 49,524 41,046
Property, plant and equipment, net 18,651 16,897
Investment in Limoneira 35,954 45,634
Goodwill 3,591 3,591
Other assets 2,335 1,314
--------------- --------------
$ 110,055 $ 108,482
=============== ==============
Liabilities and shareholders' equity
Current liabilities:
Payable to growers $ 12,540 $ 1,753
Trade accounts payable 3,203 1,892
Accrued expenses 12,046 12,482
Income tax payable 823 --
Short-term borrowings 1,753 1,424
Dividend payable -- 4,564
Current portion of long-term
obligations 1,308 1,313
--------------- --------------
Total current liabilities 31,673 23,428
Long-term liabilities:
Long-term obligations, less
current portion 10,412 11,719
Deferred income taxes 4,750 8,589
--------------- --------------
Total long-term liabilities 15,162 20,308
Total shareholders' equity 63,220 64,746
--------------- --------------
$ 110,055 $ 108,482
=============== ==============
CALAVO GROWERS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts)
Three months Nine months
ended July 31, ended July 31,
----------------- -------------------
2006 2005 2006 2005
-------- -------- --------- ---------
Net sales $78,954 $88,699 $197,030 $196,576
Cost of sales 68,738 79,505 174,743 179,075
------- ------- -------- --------
Gross margin 10,216 9,194 22,287 17,501
Selling, general and
administrative 5,284 4,825 14,791 13,645
------- ------- -------- --------
Operating income (loss) 4,932 4,369 7,496 3,856
Other income (expense), net (136) 153 (201) 2,144
------- ------- -------- --------
Income before provision for
income taxes 4,796 4,522 7,295 6,000
Provision for income taxes 1,870 1,603 2,845 2,161
------- ------- -------- --------
Net income $ 2,926 $ 2,919 $ 4,450 $ 3,839
======= ======= ======== ========
Net income per share:
Basic $ 0.20 $ 0.21 $ 0.31 $ 0.28
======= ======= ======== ========
Diluted $ 0.20 $ 0.21 $ 0.31 $ 0.28
======= ======= ======== ========
Number of shares used in per
share computation:
Basic 14,292 14,171 14,308 13,729
======= ======= ======== ========
Diluted 14,351 14,237 14,365 13,796
======= ======= ======== ========
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