U.S.: Calavo revenues rise despite Mexican avocado strikes
The head of one of the world's leading avocado marketers has hailed his team's abilities to deliver significant upticks in revenue and profit in the fourth quarter, despite lower unit volumes during the period.
In Calavo Growers' (NASDAQ: CVGW) fourth quarter and annual results announcement today, CEO Lee E. Cole did not specifically mention the mid-October strike that caused great supply uncertainty for the sector, but clearly alluded to it.
"In the Fresh business segment, our team demonstrated strong sourcing and sales management—hallmarks of this company—to successfully increase revenue and gross profit in spite of lower unit volumes, a circumstance experienced by the entire avocado industry during the period," he said.
"The substantial increase in gross margin reflects disciplined sourcing and sales management as the company successfully navigated challenging fresh-avocado supply conditions during the final quarter that resulted in fewer total avocado units sold in the period.
"Total Fresh units sold in the fourth quarter declined to 3.2 million, which compares with 4.4 million total Fresh units sold in the fiscal 2015 final quarter."
For the fourth quarter, net income rose 92% to US%9.2 million, while revenue was up 19% at US$247.7 million.
"It is extremely gratifying that Calavo registered such a strong performance in the fourth quarter to cap yet another record-breaking year," Cole said.
"Our fourth-quarter operating results helped propel full-year revenues, gross margin, net income and EPS to new record levels, including double-digit growth of those latter three metrics.
"In the final quarter, the company achieved solid revenue increases in each of the company’s three business segments: Fresh, Renaissance Foods Group (RFG) and Calavo Foods."
For the full year, net income soared by almost 40% to reach US$38 million, while revenues also hit new records at US$935.7 million, representing a 9% year-on-year jump.
He said these figures are even more impressive considering the large expenses incurred during the year.
"Specifically, we created new or expanded manufacturing and distribution infrastructure in Florida, Texas and Jalisco, Mexico, incurring $4.2 million in combined plant pre-opening expenses, on-boarding and training of new employees, and excess overhead costs in fiscal 2016," Cole said.
"If we had not incurred these $4.2 million in expenses, along with an additional $0.5 million in non-operating, non-cash expenses, we would have added after-tax net income approximating $3.0 million, or $0.17 per diluted share, to our full-year results."