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Calavo Growers, Inc. (Nasdaq-GS: CVGW) today reported that fiscal 2011 second quarter revenues rose nearly nine percent from the corresponding period last year on the strength of higher fresh avocado sales. Net income in the most recent quarter was lower, however, due principally to high costs in the company’s prepared avocado business resulting from insufficient fruit volume in the marketplace and weather-related delays of fresh tomato shipments.
For the three months ended April 30, 2011, Calavo recorded net income of $2.4 million, equal to $0.16 per diluted share, on revenues of $118.7 million. This compares with net income of $4.8 million, or $0.33 per diluted share, on $109.2 million in revenues during the year-earlier second quarter. Gross margin equaled $9.4 million, or 7.9 percent of revenues, versus $13.1 million, equal to 12.0 percent of revenues, in the fiscal 2010 second quarter.
For the first six months ended April 30, 2011, net income totaled $4.7 million, or $0.32 per diluted share, versus $7.1 million, or $0.49 per diluted share, in the initial six months last year. Initial six-month revenues rose 19 percent to $210.0 million from $176.5 million in the corresponding period last year. Gross margin approximated $18.1 million, or 8.6 percent of revenues, which compares with $22.0 million, or 12.4 percent, in the fiscal 2010 first half.
Chairman, President and Chief Executive Officer Lee E. Cole stated: “Calavo continues to execute its operating plan well. Our second quarter results instead reflect fluctuations inherent to our Fresh and Calavo Foods segments: adverse weather and cyclically higher fruit costs which resulted in a drag on margins in our prepared avocado business. The impact of these two factors, as well as the lower volume of fresh avocados, account primarily for the difference in our second-quarter operating performance year over year.”
Cole continued: “Insufficient volume in the marketplace at present is creating over-reliance on fruit sourced from Mexico and causing avocado prices to surge. These high prices are indicative of the strong industry demand for fresh avocados, but have precisely the opposite effect on our prepared guacamole business: soaring fruit costs are constraining margins in that segment.”