Calavo starts 2018 “in fine form” with record Q1 results

March 07 , 2018

Calavo Growers (Nasdaq-GS: CVGW) has seen 36% year-on-year growth in net income for the first quarter of 2018, boosted by a strong underlying sales performance. 

The US$7.1 million result is a record first quarter result for the company, as is the revenue figure of US$247.9 million which represents growth of 9.4%.

Almost half of this revenue comes from the fresh segment with volume growth of 13.2% to 4.1 million total fresh units.

“Calavo began fiscal 2018 in fine form, reaching new first-quarter highs for revenue, gross profit, operating income and net income,” CEO Lee E. Cole said in a release.

“These results reflect top-line growth across all three business units and, in particular, the outstanding performances in our Fresh and Calavo Foods segments where sales and gross margin dollars rose sharply to drive overall net income and per-share results.

“Our Fresh segment executed very well in the quarter, posting unit volume gains in avocados and other fresh produce, namely tomatoes. Fresh avocado sourcing, production and sales management continue to anchor Calavo’s strong earnings growth, but we also saw solid, incremental contribution from our other produce categories, too.”

Calavo’s Renaissance Food Group (RFG) segment continue its revenue growth trend, but gross profit was down by around a third amidst a continued ramp up of newer facilities including the Riverside facility and reduced service levels at the Houston facility resulting from labor shortages in relation to the city’s massive rebuilding efforts in the aftermath of Hurricane Harvey. 

Cole said Calavo’s start to fiscal 2018 left him “confident and optimistic about the company’s path ahead and that it remains on a trajectory to post record revenues and earnings per share” in the current year.

“We continue to see strong fresh avocado demand and it will be met with a larger all-source industry supply that is forecast to increase approximately 20 percent,” he said.

“Avocado consumption—both domestically and internationally—continues to trend upward and we are well-positioned to help satisfy this demand. For these reasons, I am affirming our previous forecast of double-digit revenue growth in the Fresh business segment.

“We turn next to our unconsolidated subsidiary, FreshRealm, LLC, which Calavo seeded and continues to hold a meaningful ownership interest. FreshRealm, utilizing advanced technology, is becoming the leading innovator in delivering meal-kits to the retail and direct-to-consumer marketplaces.

“Notably, Weight Watchers International recently announced a strategic partnership with FreshRealm to roll out Weight Watchers branded meal kits later in 2018. We are excited about this partnership as well as a number of other significant partnership opportunities FreshRealm has secured or is in the process of developing, and look forward to watching the FreshRealm business grow in 2018.”

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