Calavo Growers Reports Positive Q3 Results and Dividend Growth
Calavo Growers, Inc. Reports Third Quarter Financial Performance
Calavo Growers, Inc. (Nasdaq: CVGW), a well-respected leader in the processing and distribution of avocados, tomatoes, and guacamole, has recently shared its financial results for the third quarter of the fiscal year. This report highlights both revenue growth and the company's strategic direction moving forward.
Overview of Third Quarter Performance
During the fiscal third quarter ending July 31, 2024, Calavo experienced a total net sales increase of 11.7%, reaching $179.6 million compared to the same quarter last year. The increase in sales was fueled by a 13.3% rise in the sales from the Grown segment, which recorded net sales of $163.2 million. However, the Prepared segment saw a slight decrease of 2.4%, with total net sales reported at $16.4 million.
Significant Financial Highlights
Despite the positive sales growth, the company faced challenges with its gross profit, which fell by 8.7% to $20.1 million compared to the prior year. Adjustments reveal that the Grown segment's gross profit decreased by $1.2 million, while the Prepared segment saw a reduction of $0.8 million. Net income for the period was reported at $5.4 million, translating to $0.30 per diluted share, down from $8.7 million, or $0.48 per diluted share, the previous year.
In terms of adjusted metrics, Calavo reported adjusted net income of $10.2 million, equivalent to $0.57 per diluted share, an improvement from $7.7 million or $0.43 the previous year. The adjusted EBITDA reached $13.5 million, marking a slight increase from $13.0 million in the same quarter last year.
Board Action on Dividends
In a move reflecting confidence in the company’s ongoing financial health, the Board of Directors has approved a cash dividend increase of $0.10 per share, raising the total to $0.20 per share. This dividend is scheduled to be distributed on October 30, 2024, to shareholders on record as of October 2, 2024.
Management Insights
Lee Cole, President and Chief Executive Officer of Calavo, provided commentary on the results: "Our third quarter results reflect continued momentum in our flagship avocado business, despite facing temporary supply disruptions. The operational flexibility and strength of our team helped us achieve solid financial outcomes. We are excited to enhance our guacamole offerings in the upcoming fourth quarter, which we believe will stimulate further growth in that segment."
Financial Strategies
With the proceeds from the recent divestiture of the Fresh Cut segment, which amounted to $83 million, Calavo plans to focus on bolstering its core avocado and guacamole operations while also returning cash to shareholders over time. This strategic pivot is expected to strengthen their financial standing and create new growth opportunities in a competitive landscape.
Looking Ahead
As Calavo heads into the fourth quarter, the company continues to express optimism about maintaining strong financial results. The integration of innovative products into their guacamole line reflects a commitment to evolving consumer preferences and enhancing market penetration.
Segment Breakdown
The Grown segment remains a cornerstone of Calavo’s overall performance, showing resilience amidst fluctuating costs. With avocado prices increasing by 25%, achieving solid gross margins, the company is positioned to leverage favorable trends in production and demand in the months ahead.
Summary of Financial Health
Calavo's end of quarter financial health shows a reduction of net debt by $9.5 million, leading to an approximate liquidity of $57.3 million as of the end of July 2024. Following proactive debt management, the complete remaining balance was retired with proceeds from the Fresh Cut business sale.
Frequently Asked Questions
What were Calavo's net sales in the third quarter?
Calavo's total net sales increased to $179.6 million for the third quarter of 2024, which represents an 11.7% rise from the previous year.
How much did the Board increase the dividend?
The Board of Directors raised the cash dividend by $0.10 per share, resulting in a total dividend of $0.20 per share.
Who is the CEO of Calavo Growers, Inc.?
Lee Cole is currently serving as the President and Chief Executive Officer of Calavo Growers, Inc.
What is the adjusted net income for Calavo in Q3 2024?
The adjusted net income for the third quarter of 2024 is reported at $10.2 million, or $0.57 per diluted share.
What significant changes has Calavo made due to its Fresh Cut segment divestiture?
Calavo intends to utilize proceeds from the Fresh Cut sale to reinvest in its core avocado and guacamole businesses while improving returns to shareholders.
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