Calavo Growers, Inc. reported financial results for its fiscal 2020 first quarter. Revenues rose to reach a new first-period record, paced primarily by a sharp increase in fresh avocado sales. However, transitory factors in Calavo’s three business segments resulted in profit that fell beneath company expectations in the initial quarter.
Revenues rose six percent to a new first-quarter record of $273.3 million, surpassing the previous high of $258.0 million posted in the same period last year. Gross profit was $15.8 million , or 5.8 percent of revenues, which compares with $30.8 million , or 12.0 percent of revenues, in the fiscal 2019 first quarter. The company posted a loss from operations of $0.4 million in the most-recent quarter, versus operating income of $16.6 million in the year-ago initial period.
Net loss for the three months ended Jan. 31, 2020 was $0.9 million , or $0.05 per diluted share. This compares with net income of $4.5 million , equal to $0.26 per diluted share, in the year-earlier first quarter. Excluding certain items impacting comparability, adjusted net income (1) was $1.2 million , or $0.07 per diluted share, versus adjusted net income of $13.0 million, or $0.74 per diluted share, in the fiscal 2019 first quarter.
James E. Gibson, who assumed the position of chief executive officer on Feb. 1, 2020, stated: “Continued growth in avocado consumption drove double-digit sales growth in our Fresh segment, and propelled total revenues to a new first-quarter high. While we are pleased by this top-line growth, Fresh segment gross profit was impacted by a number of industry factors in the first quarter. Specifically, we encountered market conditions in which selling prices remained relatively flat for most of the quarter, but avocado fruit costs rose consistently across the quarter. These challenging circumstances were driven primarily by poor fruit quality across the industry, specifically an over-abundance of lower-quality, #2 grade fruit during the period. While these transitory market conditions significantly impacted first quarter Fresh segment gross profit, we are encouraged by early indicators which show restored fresh avocado gross profit in the initial month of the current quarter.”
The Calavo CEO continued, “In line with our earlier forecast of double-digit growth in avocado volume this year, the company packed and sold 15 percent more avocado pounds in the latest quarter and outstripped overall estimated U.S. industry volume growth in the period.
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