Calavo Growers, Inc. (Nasdaq-GS: CVGW), a global avocado-industry leader and an expanding provider of value-added fresh foods, today reported that fiscal 2012 third quarter net income rose 109 percent from the corresponding period last year. The company indicated operating results were paced by sharply higher year-over-year fresh avocado volume, strong gross margins in the Calavo Foods business segment and solid incremental contribution from its Renaissance Food Group, LLC (RFG) business segment.
Prior-year quarterly figures include just two months of operating results for RFG, as compared to the most-recent period, which has a full three months of activity. RFG’s results are included as a separate business segment distinct from the company’s Calavo Foods legacy business segment.
For the three months ended July 31, 2012, net income more than doubled to $5.7 million, or $0.38 per diluted share, from $2.7 million, equal to $0.18 per diluted share, in the corresponding quarter last year. Revenues dipped seven percent to $153.2 million from $165.1 million in the fiscal 2011 third quarter, reflecting the decline in fresh avocado prices owing to the significantly larger current-year supply.
Third-quarter gross margin rose 44 percent to $16.2 million, equal to 10.6 percent of total revenues, from $11.2 million, or 6.8 percent of total revenues, in the comparable period of fiscal 2011. Operating income in the most recent quarter climbed 88 percent to $8.5 million, which compares with $4.5 million in the year-earlier third period.
Selling, general and administrative (SG&A) expenses in the most recent quarter totaled $7.8 million, equal to 5.1 percent of revenues, versus $6.7 million, or 4.1 percent revenues in last year’s third period and was comparable to SG&A in fiscal 2012 second quarter. The year-over-year increase in SG&A reflects the addition of RFG, as well as accruals for contingent consideration related to the RFG transaction and an increase in stock-based compensation expense. Contingent consideration accounted for approximately $245,000 of total SG&A expenses in the most recent quarter and amounts to about $415,000 for the fiscal year to date. SG&A as a percentage of gross margin fell by more than 1,200 basis points to 47.9 percent in the most recent quarter from 60.0 percent in the fiscal 2011 third period.