Limoneira Company, has reported its financial results for the second quarter, demonstrating lowered revenues and heightened total costs and expenses for the period, which ended April 30, 2019.
It explained that for the second quarter of fiscal year 2019, its total net revenue was US$42.0 million, down almost a million from the total net revenue of the second quarter of the previous fiscal year (US$43.1 million).
The corporation's agribusiness revenue saw a decrease as well. This year, it fell to US$40.8 million, compared to US$41.9 million during the same period in the last fiscal year. Rental operations revenue was US$1.2 million, compared to US$1.3 million in the second quarter of last fiscal year. There were no real estate development revenues in the second quarter of fiscal year 2019 or 2018.
The company's agribusiness revenue for the second quarter of fiscal year 2019 includes US$36.4 million in lemon sales, compared to US$33.6 million of lemon sales during the same period of fiscal year 2018.
This increase was primarily the result of higher volume of lemon by-products partially offset by lower prices of fresh lemons sold, said Limoneira. The lower pricing was due to excessive rains in Southern California during the first and second quarters of fiscal year 2019.
This in turn created an overabundance of large fresh lemons, which led to a decrease in lemon carton pricing, the company added.
Meanwhile, total costs and expenses for the second quarter of fiscal year 2019 increased to US$43.0 million, compared to US$33.8 million in the second quarter of last fiscal year.
The increase in operating expenses was primarily attributable to increases in agribusiness and selling, general and administrative costs and expenses, said the company.
Costs and expenses associated with its agribusiness include packing costs, harvest costs, growing costs, costs related to the fruit procured and sold for third-party growers and depreciation and amortization expense.
Elaborating on the results, Harold Edwards, president and CEO, stated, "We believe we will continue facing pricing headwinds from the overabundance of larger fresh lemons due to previous heavy rains, until the end of July 2019.
"This unusual larger sized fruit curve currently being harvested is now expected to cycle through over the next 5 to 7 weeks with a normal size curve returning by end of July, which is longer than we previously expected."
Edwards continued: “We expect to achieve record domestic and international fresh lemon volume in fiscal year 2019, but our operational costs are temporarily higher than previous expectations due to lower fresh lemon utilization and the size of our fruit and timing of new fruit on our trees being ready for picking is hard to predict.
"Even though fiscal 2019 expected results have been temporarily affected by the weather, we are well positioned for solid growth and improved profitability in the coming years. Based on our organic lemon growth for next year, expected rebound in avocado revenue and all recent acquisitions coming on-line for a full fiscal year, we are very excited about our continued long-term growth opportunities.”
According to Limoneira, one of these opportunities is the company's completion of its strategic joint venture and land acquisition in Argentina.
Regarding the venture, Alex Teague, senior vice president, stated: "This expands our lemon holdings by 1,200 acres and strengthens our ability as a 365-day, 24/7 global supplier of fresh citrus to our valued customers around the world.
"In addition, our domestic packinghouse continues to achieve our operational expectations for this year and third-party lemon volume is on plan.”