Chairman, President and Chief Executive Officer Lee E. Cole stated: “We were deeply disappointed by the ruling of the Mexican appellate court, which we and our legal counsel believe was unsupported by the facts. Despite this unwarranted non-recurring expense, by virtually all financial yardsticks Calavo registered an outstanding performance in the fiscal 2012 second quarter. The company posted solid top-line growth, paced by incremental revenue contribution from RFG. Calavo’s sharply higher year-over-year total gross margin propelled net income and per-share results in the most recent period, principally due to a 23 percent increase in fresh avocado units from the fiscal 2011 second quarter. And as point of considerable note, we also experienced year-over-year unit growth in all diversified fresh products.
“As expected, fresh avocado volume in California snapped back strongly from last year’s cyclically smaller harvest, contributing to operating efficiencies across our unit-driven infrastructure. Increased volume in California, continuing strong cost controls and favorable sourcing of fresh avocados from Mexico combined to positively impact total gross margin, which increased nearly 300 basis points from last year. Lower fruit costs in Mexico, compared to year-ago levels, are having the anticipated beneficial effect on gross margin in our prepared avocado business, which is capitalizing on the substantial available supply. Most importantly, consumer demand for avocados continues to expand.”
For the six months ended April 30, 2012, net income before the effect of the unexpected tax item totaled $7.1 million, or $0.48 per diluted share, a 51 percent increase from $4.7 million, equal to $0.32 per diluted share, in the corresponding period last year. After giving effect to the Mexican tax expense, net income was $5.2 million, or $0.35 per diluted share.
Six-month revenues rose 22 percent to $256.4 million from $210.0 million in the first half of fiscal 2011. Gross margin in the fiscal 2012 initial six months grew 49 percent to $26.6 million, equal to 10.4 percent of total revenues, from $17.9 million, or 8.5 percent of total revenues, in last year’s first half. Operating income in the most recent six months expanded to $11.5 million, a 54 percent increase from $7.4 million in the like period last year.