Calavo Growers, Inc. (Nasdaq-GS: CVGW), a global avocado-industry leader and an expanding provider of value-added fresh food, today reported a solidly profitable fiscal 2011 third quarter on the strength of revenues that rose 44 percent owing to sharply higher avocado sales. However, the company said net income in the most recent quarter was constrained principally by high fruit costs in its Calavo Foods business segment, as well as the effects of a smaller supply of fresh avocados in the marketplace.
Operating results for the most-recent quarter include those of Renaissance Food Group, LLC (RFG), which became part of the company on June 1, 2011. RFG’s results are included in the company’s Calavo Foods business segment. For the three months ended July 31, 2011, net income of $2.7 million, equal to $0.18 per diluted share, compares with $5.9 million, or $0.41 per diluted share, in the year-earlier third quarter. Revenues advanced to $165.1 million, which represents an increase of more than $50 million from $114.6 million in the fiscal 2010 third quarter. (RFG accounted for $22.8 million of the revenue increase.) Third-quarter gross margin narrowed to $11.3 million, or 6.9 percent of total revenue, from $15.3 million, or 13.3 percent of revenue, in the comparable period last year.
Net income for the nine months ended July 31, 2011 equaled $7.4 million, or $0.50 per diluted share. This compares with nine-month net income last year of $13.0 million, equal to $0.89 per diluted share. Revenues for the initial nine months of fiscal 2011 climbed 29 percent to $375.2 million from $291.1 million in the year-earlier corresponding period. Gross margin totaled $29.4 million, or 7.8 percent of total revenues, versus $37.2 million, or 12.8 percent, for the first three quarters of fiscal 2010.
Chairman, President and CEO Lee E. Cole stated: “While the fiscal 2011 third quarter presented challenges due principally to the limited avocado supply and strong avocado demand, Calavo’s ability to navigate them and remain solidly profitable underscores the strength of our business model. Simultaneously, the company made measurable strides in building a stronger, larger and more broad-based enterprise. On June 1, we completed our acquisition of Renaissance Food Group and its portfolio of brands, which contributed to quarterly revenues that reached record levels. Calavo’s operating results, though, principally reflect the two-fold impact on gross margins due to the significantly smaller year-over-year avocado supply.