Calavo kicks off 2019 with record results as Q1 net income soars
Calavo Growers (Nasdaq-GS: CVGW) saw a 36% year-on-year rise in adjusted net income to US$13 million in the first quarter ended Jan. 31 on the back of "substantially" higher avocado sales.
It also registered a 17% increase in gross profit to US$30.8 million - which it attributed to leveraging its strengths in fresh avocado sourcing, production and sales management - while revenues climbed 4% to US$258 million.
“I am pleased to report that Calavo began fiscal 2019 with record-breaking results," said Lee E. Cole, chairman, president and CEO.
"Our first quarter adjusted net income and adjusted diluted earnings per share were approximately 36 percent higher than our previous first quarter record achieved last year.
“In the Fresh segment, we overcame a period of limited industry supply in early November and yet still sold substantially more avocado units in the quarter, when compared to last year."
The Renaissance Food Group (RFG) segment posted top-line growth of 12 percent "despite continued industry challenges", he added.
"In addition to the FDA’s romaine lettuce advisory in November, we also faced raw material challenges across a number of our key sourced ingredients during the quarter, both impacting costs and constraining sales. These unforeseen adverse conditions did not emerge until the last half of the first quarter.
"RFG’s ability to grow its sales by double digits while navigating these industry headwinds speaks to the underlying strength of the business we have built over the past several years."
Sales in the Calavo Foods division segment rose 16% on strong volume growth for prepared guacamole products. Cole said the first quarter's performance "punctuates" the segment's meaningful contribution to the company’s total revenue and profit growth.
Cole said that Calavo moves forward in a “strong position" and remains on target to post record revenues in fiscal 2019.
“We are extremely confident and optimistic about the course ahead in our Fresh business segment," he said.
"Overall industry supply set new records this Super Bowl season, another indication that consumer demand for avocados continues to rise. As important, though, is that we saw strong post-Superbowl demand, which provides a positive early indicator heading into our fiscal second quarter.
"As an industry leader, with our strong portfolio of resources and diversified sourcing model, we are well positioned to take advantage of this category’s growth and expect Calavo avocado unit sales volume to rise by double digits once again this year."
He added that while RFG's ability to grow its sales in spite of industry challenges gives him confidence in the segment’s ability to deliver double-digit top-line growth during fiscal 2019, he expected that year-on-year gross profit in the second quarter would fall short of forecasts.
For Calavo Foods he said the company continues to be "deeply gratified" by the segment's growth, and expect a strong performance in 2019.
Summing up, he said: “Calavo’s businesses are executing well and we are excited about the course ahead in fiscal 2019 and beyond. With our deep breadth of resources—operating, financial and human capital—as well as planned initiatives during the current year, we
think the future looks exceedingly positive and I am eagerly anticipating reporting on the company’s continued progress."
Correction - March 7: An earlier version of this article incorrectly stated that Calavo's adjusted net income for the first quarter was US$4.5 million when in fact it was US$13 million.