Calavo boosts Q2 earnings following record avocado volume
Avocado company Calavo Growers has posted increased second-quarter earnings on the back of record avocado volumes in the first half of this year.
Total revenue came in at $276.8 million, at the high end of guidance and indicating a return to pre-pandemic results. In the same quarter last year - which included one and one-half months of pre-pandemic impact - revenue was slightly higher at $281.2 million.
While avocado volumes were 9 percent higher than the prior-year period, total revenue was impacted by the lower average selling price of avocados in the company’s Fresh segment, which resulted from increased supply from Mexico.
Fresh segment sales decreased 5 percent and offset higher sales volumes in the RFG and Foods business segments.
Gross profit came in at $22.6 million, or 8.2 percent of revenue, slightly higher than the $22.1 million recorded last year. The increase in gross profit margin percentage was attributable to volume growth in the Fresh segment.
Net income hit $8.8 million, compared to net loss of $3.3 million in the second quarter of last year.
Adjusted EBITDA of $15.0 million, which is a 9.5 percent increase compared to $13.7 million for the same period last year.
“We are indeed seeing positive signs as the economy reopens and we are pleased with our recovery, which is driving our long-term optimism. For the first half of 2021, we recorded the highest avocado volume in the last five years—reflecting growing consumer demand across all our end markets,” said James E. Gibson, CEO of Calavo Growers.
“As our various markets slowly re-emerge from the pandemic, we delivered strong returns this quarter. Even with 9.5% EBITDA growth, profitability was restrained as our company managed through a tight labor market, higher commodity costs and higher freight costs.
“Our Fresh segment reported gross profit in line with previous quarters due to the team’s skillful management in both sourcing and sales growth. Our RFG and Foods segments saw a return to year-over-year sales growth as a result of improved demand, particularly within the retail grocery channel. For comparison purposes, RFG sales in the second quarter of fiscal 2020 included $9.8 million attributable to RFG’s Midwest co-packer."
He added that the company is also encouraged by the continued growth in its international business. Demand for guacamole, for example, continues to increase, he said, and the company's near-term outlook remains favorable with a number of new customer opportunities.
“As the year progresses, we are focusing our energy on areas we can control and advancing our strategic goals. We continue to monitor inflation, the labor market and the various supply chains to get a better read on how the second half of the year will evolve," Gibson said.
"We continue to focus on our strategic initiatives designed to enhance our long-term growth prospects, capitalize on opportunities to increase operating leverage, further our sustainability initiatives, and realize synergies across our entire organization, with the goal of improving profitability, sustainability and shareholder value."