Limoneira Co

Greetings and welcome to the Limonera second quarter fiscal year 2021 financial results. 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. It is now my pleasure to introduce your host, Deirdre Thompson with ICR. Thank you. You may begin.

Good afternoon, everyone, and thank you for joining us for Lee Manera's second quarter fiscal year 2021 conference call. On the call today are Harold Edwards, President and Chief Executive Officer, and Mark Pelham Mountain, Chief Financial Officer. By now, everyone should have access to the second quarter fiscal year 2021 earnings release, which went out today at approximately 4 p.m. Eastern time. If you've not had a chance to review the release, it's available on the investor relations portion of the company's website at www.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 insurgencies, 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 Limonera'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. A reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measures is included in the company's 10Q and press release, which have been posted to its website. And with that, it's my pleasure to turn the call over to the company's president and CEO, Mr. Harold Edwards.

Thanks, Deirdre, and good afternoon, everyone. We are very pleased with our 14% second quarter top line growth and bottom line improvement. These results were driven by record second quarter lemon volume and improved pricing as well as strong avocado volume. Our focus on retail food and club grocery business continues to perform well. and we are beginning to experience an improvement in domestic food service and export sales as dining out increases from COVID-19 vaccine distribution. Additionally, due to our continued focus on cost improvement initiatives, our adjusted EBITDA improved to $6 million compared to a loss of $100,000 for the same period last year. Also, our real estate development project, Harvest at Limonera, continues to perform very well and I will discuss that in more detail in a few moments. I'll now discuss each of our business divisions performance for the second quarter starting with our agribusiness. Our agribusiness revenue was $44 million compared to $38.4 million in the second quarter of fiscal year 2020. Fresh lemon revenue was $28.7 million and compared to $25.3 million during the same period of fiscal year 2020. Our stronger results were driven by volume and price. Overall pricing was $18.79 average price per carton compared to $17.14 average price per carton. Fresh lemon utilization rates were 75% to 80% compared to 50% to 55% in the prior year period. Avocado revenue improved to $2.7 million compared to $2 million for the same period last year. Orange revenue was lower in the second quarter as higher prices of oranges were partially offset by the timing of our harvest. The orange season has had a slower start than anticipated. However, it is our expectation for fiscal year 2021 to have similar profitability on fewer cartons and acres dedicated to oranges. Specialty citrus and other crop revenue was similar to prior fiscal year period at $1.2 million. Turning now to our real estate development segment. We have now closed 524 lots since inception, including 66 lot closings in the second quarter of fiscal 2021 and 60 new lot closings so far in the third quarter of fiscal year 2021. The pace of home sales has been increasing this year, and as each quarter closes, we gain confidence in the timing of the expected $80 million of cash distributions from Harvest at Lima Nera over the next six years, beginning in fiscal year 2022. In addition, we believe there is the potential upside to our stated cash distributions due to increased number of housing units at Harvest at Lima Nera, as well as the potential opportunity of a medical campus in our East Area 2 development. As we enter our third quarter, we are very confident we will achieve improved year-over-year results due to our expanded footprint in retail, as well as the early signs of improving food service coming back online, both domestically and globally. We are encouraged by the record fresh lemon volume during our second quarter and the continued improvement in our cost structure. We expect positive cash flow towards the end of fiscal year 2022 from Harvest at Lima Nera 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.