Limoneira Co

Greetings and welcome to the Lemonera fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the conference over to your host, John Mills.

Thank you. Good afternoon, everyone, and thank you for joining us for Lima Nera's fourth quarter fiscal year 2020 conference call. On the call today are Harold Edwards, President and Chief Executive Officer, and Mark Palamountain, Chief Financial Officer. Right now, everyone should have access to the fourth quarter fiscal year 2020 earnings release, which went out today at approximately 4 p.m. Eastern time. If you have not had a chance to view the release, It's available on the investor relations portion of the company's website at limanera.com. This call is being webcast, and a replay will be available on Limanera's website as well. Before we begin, we'd like to remind everyone that prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control and could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risk details in the company's 10 Qs and 10 Ks filed with the SEC and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether a result of new information, future events, or otherwise. Please note that during today's call, we will be discussing non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Lehman Air's ongoing results of operations, particularly when comparing underlying results from period to period. We have provided as much detail as possible on any items that are discussed on an adjusted basis. Also, within the company's earnings release and in today's prepared remarks, we include adjusted EBITDA, which is a non-GAAP financial measure. The reconciliation of adjusted EBITDA to those most directly comparable GAAP financial measures is included in the company's 10-K and press release, which have been posted to our website. And with that, it's my pleasure to turn the call over to the company's president and CEO, Mr. Harold Edwards.

Thanks, John, and good afternoon, everyone. During fiscal 2020, we made important strides in many areas of our overall business, despite the dramatic effect the COVID-19 pandemic had on our food service business. We achieved record domestic lemon volume and our real estate development harvest at Limonera exceeded our expectations. Domestic lemon volume was up due to our expanded focus on grocery retail, as consumers continued to dine at home instead of food service venues. COVID-19 has affected our citrus businesses since March, and this continued during our seasonally soft fiscal fourth quarter of 2020. Pricing improved in the beginning of the fourth quarter. However, this was short-lived as reduced exports to Asia affected pricing in the back half of the quarter and continues to affect pricing in the first fiscal quarter of 2021. In addition, higher than normal winds in our coastal properties affected our lemon utilization during the fourth quarter. Even despite these challenges, we continue to be a leader in food service and exports and are well positioned once dining out improves from COVID-19 vaccine distribution. I'll now discuss each of our business divisions' performance for the fourth quarter, starting with our agribusiness. Agribusiness revenue was $28.6 million compared to $35.3 million in the fourth quarter of last fiscal year. Fresh lemon and orange revenues were down due to food service closures and lower export demand, which resulted in lower average per carton prices. We recognized a $500,000 increase of avocado revenue in the fourth quarter of fiscal year 2020 compared to $2.3 million in the same period last fiscal year. The year-over-year decrease in avocado revenue was due to the receipt of crop insurance proceeds in the fourth quarter of 2019. Turning now to our real estate development segment. We have now closed 354 lots since inception, including 144 new lot closings in fiscal 2020. And Lennar, one of our primary builders, recently announced they expect additional lot closings of 76 residential units by the end of June 2021. Based on these stronger than expected home building results throughout fiscal year 2020, We now have annual visibility on the expected $80 million of cash distributions from harvest at Lima Nera during the next six years, beginning in fiscal year 2022. You will notice in our earnings release, we have provided a chart outlining our annually expected cash distributions during the next six years. The expected cash distributions do not include the potential upside from increased density in housing at harvest, as well as the potential opportunity of a medical campus in our East Area 2 development. We expect to be in a position to provide greater transparency on those opportunities later this year. Our company now has over 15,000 acres of prime agricultural land, 550 acres of residential housing we are selling, many additional non-agricultural assets we expect to monetize in the future, and over 28,000 acre feet of water assets. We are also opportunistically repurchasing stock. We continue to be very good stewards of these assets and believe our company will continue to reward long-term shareholders for many years to come. As we look into 2021, we are very well positioned to realize strong revenue from oranges and avocados and expect an improvement in lemon pricing once the COVID-19 vaccine allows restaurants and bars to reopen. We believe we will be even better positioned for long-term growth thanks to our grocery and club expansion during this pandemic. We are encouraged by the domestic increase in fresh lemon volume in fiscal year 2020 and look forward to updating you on our agribusiness and real estate progress in the coming months. And with that, I'll now turn the call over to Mark.