Calavo cuts Q3 earnings estimate due to inflationary pressure on labor, raw materials and freight
Avocado company Calavo Growers has reduced its earnings estimate for the third financial quarter due to inflationary pressures on labor, raw materials and freight.
After an initial review of the quarter's operating results, the company now expects revenue to be between $275 million and $285 million, near the low end of its previously announced range.
Adjusted EBITDA is expected to be in the range of $0 to $2 million, below its previously announced range of $11 million to $15 million.
Calavo’s third-quarter 2021 results will be reported on September 8, 2021, and the Company will hold its earnings call the same day.
"The revised adjusted EBITDA estimated range is largely due to gross margins that are below the Company’s previous expectations. The Company’s original forecast reflected near-term inflationary pressures on labor, raw materials and freight, as previously discussed," Calavo said.
"However, these pressures, as well as delays in the Mexican and Californian avocado crops, were more acute than anticipated. The delay in the Mexican summer crop and slow start to the California season resulted in limited supplies of the most desirable fruit (both in sizes and quality) which affected the Company’s avocado margins."
In the company’s Renaissance Food Group, labor shortages impacted throughput and increased the cost of labor, it said. Raw material costs and freight costs remained higher and for longer than expected, impacting all segments.
Calavo expects that a number of these pressures will continue into the fourth quarter, but that by the end of the calendar year many of them will be mitigated through a combination of pricing initiatives and the implementation of internal operational efficiencies.
Calavo will release financial results for the third quarter ended July 31, 2021 after the market closes on Wednesday, September 8, 2021.
In March 2021, Calavo CEO Jim Gibson noted that prices in the U.S. avocado market were beginning to edge upward amid a gradual reopening of the economy and foodservice sector.