Calavo Growers, Inc.

Greetings and welcome to the Calavo Growers Incorporated fourth quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lisa Mueller. Thank you, Lisa. You may begin.

Thank you, Operator, and thank you all for joining us today to discuss Colabo Growers' fourth quarter 2020 financial results. This afternoon, we issued our earnings release, and this document is available in the investor relations section of our website at ir.colabo.com. I am here today with Jim Gibson, Chief Executive Officer of Colabo, and Kevin Mannion, Chief Financial Officer. On today's call, management will provide prepared remarks, and then we will open up the call for your questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about our outlook for revenue and adjusted EBITDA, are also forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-K and 10-Q. With that, I would now like to turn the call over to Jim Gibson. Jim, please go ahead.

Thank you, Lisa. Good afternoon, everyone. We welcome the opportunity to speak to you today and hope you and your families continue to be healthy and safe. The fourth quarter played out similar to the trends we saw in the third quarter. Avocado volumes continued to expand, reflecting heavy demand and rising popularity across the country. Even so, there was ample supply to meet that demand. Mexico had larger harvest this year, and there was no supply restrictions as we experienced last year. California and Peru also had strong growing seasons, which led to a 22% price contraction compared to last year. Our supply chain remains strong with very low incidence of disruption due to the pandemic. We continue to optimize our supply chain by knowing what our customers want and managing their preferences at the source. Our team is very skilled in matching sizes and grades to customer profiles, which is a delicate balance achieved through decades of experience. In the RFG and food segments, Volume was lower due to the closure of our Midwest co-packer earlier this year, as well as the challenging demand environment in our wholesale and food service channels due to the pandemic. While COVID-19 continued to have a negative impact on our business, we remain focused on the things that we can control, including steps to improve processes, innovation, efficiency across our organization. For example, RFG has a strong reputation for its solutions-based approach to serving customers. When demand dropped for grab-and-go products, a high-value category for our customers, our team shifted to meet the rising demand for fast and easy meals at home. We adapted to provide meal solutions such as family-sized green salads, vegetable side dishes, and deli service items sold in single-serve configuration to drive sales with deli counters and self-service bars, are now closed. The quick pivots we made enhanced our ability to innovate and adapt, which will ultimately leave the company in a stronger position once we emerge from the pandemic, especially when food service and hospitality markets return. I am very proud of our team and want to thank our nearly 4,000 employees for their dedication and commitment. Their collective efforts allowed us to maintain the supply chain continuity and better serve our customers during these unprecedented times. Regardless of the current challenges, we continue to implement our transformative one company initiatives, and we are already seeing the power of operating as one company. Our RFG and food segments are really beginning to work together to create product sets that are very practical combinations for customers And their cross-selling efforts are paying off for some of our largest customers. We plan to keep expanding into higher margin food products by developing complementary products with favorable margin profiles. And as we expand our product lines, we will also leverage the Collabo brand appeal to develop new higher margin products. The current lower avocado price scenario has a silver lining. It presents an opportunity to lower our input costs in our foods division, allowing us to keep comfortable margins even in the lower volume. With the growing popularity of avocados driving double-digit growth in consumption across Europe and Asia, growing international sales is another big initiative for us. In response, we are focused on achieving higher utilizations from our Jalisco packinghouse by selling into the European marketplace and from our Michoacan plant by selling into Asia. We are excited by the relatively untapped potential for Colabo in those vast markets. Our one company priorities for our employees are to establish centralized leadership, enhance continuous learning, and provide career enhancement. To that end, we have consolidated our employee benefits plans and have begun building our management team by adding new leaders in our regional and procurement functions. We're also promoting top employees to the corporate level in areas of quality assurance, marketing, corporate communications, and information technology. In addition, we have raised our commitment to increase communication across our entire one company organization by hosting our first and second employee town hall meetings and publishing a company newsletter. From an environmental perspective, we reduced our office space footprint by about 60%. We also partnered with two food technology companies to offer our customers options to drastically reduce food waste, including a peel, a plant-based protection barrier that extends shelf life of produce, and Shelf Engine, an intelligent forecasting system that helps grocers more accurately buy perishables. As I've said before, we are very committed to increasing our transparency with all audiences. This year, we accomplished many firsts with the investor community, including hosting quarterly conference calls, this being our third. We also produced an investor presentation, which can be found on our website, and participated in two virtual investor conferences, with a third scheduled for January. As we close out 2020 and reflect back on the year, our entire team worked very hard to build upon our solid foundation and position the company for future growth. We made it a top priority to maintain an uninterrupted supply chain. We bolstered our senior management team with key promotions and additions and centralized leadership for all critical operational and financial functions. We initiated programs to consolidate our organizational structure that will deliver improved operational efficiency. We introduced new products and innovative solutions to our customers. We expanded our independent board representation and redoubled our commitment to our ESG initiatives. We maintained a strong balance sheet and ample financial flexibility. We continued to pay an annual dividend to our shareholders, as we have for the past 19 years, and we increased it by 4.5 percent this year. We strengthened our position to capture the increasing demand for avocados across the U.S., and we will continue to push our growth objectives both domestically and internationally in 2021. As we look at 2021, we expect to see a continuation of current trends across all segments. The large harvest in Mexico, combined with continued impact of COVID-19, will maintain the scenario in which supply remains higher than demand. The silver lining to this situation will benefit the food segment, as lower input costs will allow for solid retained margins and opportunities to gain business. This circumstance is allowing the segment to expand into new selling channels that will be developed as we progress into the second quarter. While RFG is still impacted by the closure of our Midwest COPAC operation through April 2021, year-over-year sales out of existing facilities is expected to continue growing and will provide RFG with the platform to accelerate sales and margin growth during the second half of the year. With that, I'll turn the call over to Kevin.