Revenue exceeds US$1B for the first time at Calavo Growers
Avocado, processed foods and perishable food technology company Calavo Growers (NASDAQ: CGVW) has recorded a 34% rise in net income for the second quarter to reach US$12.9 million, while 12-month revenue passed the US$1 billion mark for the first time.
At the time of writing the company's share price was trading 6.3% higher at US$73.4 per share.
"Calavo registered a very successful second quarter as evidenced by upward trend lines in revenues, gross margin, net income and earnings per share, which advanced operating results to these new record levels," Calavo's chief executive officer Lee E. Cole said in a release.
"Our three principal business segments – Fresh, Renaissance Food Group (RFG) and Calavo Foods – are executing well with each segment posting double-digit top line growth in the most recent period leading to overall growth in revenues of nearly 23 percent.
"Operating results in the most recent quarter were led by revenue and gross margin growth in our Fresh segment. Calavo’s outstanding sourcing, sales and production management capabilities helped boost our Fresh segment results to new second quarter highs in revenue and gross margin."
Fresh segment revenues for the quarter rose 24% year-on-year to reach US$155.6 million, a result attributed primarily to Calavo's avocado operations, "where management’s focus and execution on continuous improvement across the operation helped to complement the current market conditions" with demand exceeding available supply.
The reduced avocado industry supply was the main reason that the company’s fresh segment packed 4.8 million total units in the most recent quarter versus 6.4 million total units in the fiscal 2016 second period.
Cole said he was "genuinely enthusiastic and confident" about the company's prospects for fiscal 2017 and beyond.
"In our Fresh segment, Calavo is strongly positioned to manage the growing and dynamic avocado industry with our broad, highly experienced team focused on continuous improvement across the operation," he said.
"Our outstanding second quarter results in the Fresh segment punctuate this point. Consequently, we are reaffirming our expectations for double-digit revenue growth and higher gross margin dollars in fiscal 2017.
Later this fiscal year, division Renaissance Food Group (RFG) is set to open a new production and distribution center in Riverside, California, which will be a 128,000-square foot facility intended to serve an expanding customer base across the southwest United States.
"This facility represents the latest in a series of substantial capital investments over the past two years into RFG to expand in-plant capabilities and extend RFG’s ‘just-in-time’ distribution to more regions across the country," Cole said.
"We remain confident about RFG’s formidable revenue and gross-margin dollar growth potential. In the near-term – fiscal 2017 specifically – we expect revenues to rise by more than 20 percent and higher year-over-year gross margin dollars.
"Calavo Foods, as anticipated, is trending in line with double-digit sales growth. The business segment continues to perform consistently and we are enthusiastic about its prospects ahead, owing to a lineup of well-regarded products and blue-chip retail and foodservice customers."