Calavo Growers, Inc. reported its financial results for the second quarter ended April 30, 2020.
“We have been operating under extraordinary circumstances in the COVID-19 environment and I want to thank our employees for their steadfast commitment to serving our customers and operating at the highest standards every day,” said James E. Gibson, CEO of Calavo Growers. “Our sales were significantly impacted beginning in March by the closure of large restaurant chains, retail food outlets and the consumer shift to non-perishable foods at the onset of shelter in place restrictions. However, demand in our retail grocery and foodservice channels began to improve in April with further progress through May.”
Gibson continued, “Our Fresh segment was especially resilient during the quarter, with sales increasing 13.0% over last year, and gross profit per carton of avocados improving sequentially from Q1. As the economy gradually reopens, we expect demand to pick up across our Fresh, RFG and Foods segments, and our bottom line to return to pre-COVID-19 levels.”
Total revenue for the second quarter 2020 was $281.2 million as compared to $286.2 million for the second quarter 2019, representing a 1.8% decrease primarily due to lower sales volumes in the RFG and Foods business segments as a result of COVID-19.
Gross profit for the second quarter was $22.1 million, or 7.9% of revenue, as compared to $36.8 million, or 12.9% of revenue, for the same period last year. The decrease was attributable to gross profit declines in the Fresh and Foods segments.
Second quarter 2020 sales in Calavo’s Fresh business segment increased 13.0% to $170.9 million from $151.2 million in the same period last year. While revenue increased year-over-year, growth was constrained by the impact of COVID-19. Sales volume fell sharply in mid-March as foodservice orders declined and consumers shifted to purchasing non-perishable goods.
Following the initial impact of COVID-19, as consumers began to shift back to more normal buying patterns at retail grocery outlets and as the foodservice industry began to open for take-out and delivery, demand in the Fresh segment began to normalize in April and that continued in May. Fresh segment gross profit declined to $14.4 million, or 8.4% of segment sales, from $27.8 million, or 18.4% of segment sales, in the second quarter of 2019. The decrease was due to a $3.4 million impact from foreign currency remeasurement resulting from the rapid devaluation of the Mexican peso as well as losses stemming from COVID-19 related order cancellations.
Excluding these two factors, profit per carton on avocado sales compared favorably to historical averages, though it was down from last year’s second quarter when favorable conditions rose well above historic levels. On a sequential basis, the quality of avocados improved relative to the first quarter of 2020, resulting in higher pricing and gross profit per carton compared to the prior period.