Limoneira Co

greetings and welcome to the limonera third 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 0 on your telephone keypad as a reminder this conference is being recorded it is now my pleasure to introduce your host john mills with icr thank you you may begin

Good afternoon, everyone, and thank you for joining us for Lehman Era's third quarter fiscal year 2021 conference call. On the call today are Harold Edwards, President and Chief Executive Officer, and Mark Palamountain, Chief Financial Officer. By now, everyone should have access to the third 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 view the release, it's available on the investor relations portion of the company's website at LehmanEra.com. This call is being webcast and a replay will be available on the preliminary'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've 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, John, and good afternoon, everyone. During the third quarter, our increase in fresh lemon utilization higher price per carton of fresh lemons, and continuing cost improvement initiatives were the primary driving factors behind our 86% increase in operating income year over year. We achieved this improvement despite the previously announced reduced sizing of our avocado fruit due to lack of rainfall, as well as the widely publicized global logistical delays that are affecting the entire agricultural industry, and reduced exports to Asia due to the COVID-19 Delta variant in these countries. Our team worked very hard to reduce the effect these temporary headwinds had on our third quarter results, and we're excited about how we are positioned for revenue and earnings growth in fiscal year 2022. Our real estate development project, Harvest at Lima Nera, continues to perform very well, and I will provide an update on this project in a few minutes. I'll now discuss each of our business divisions' performance for the third quarter, starting with agribusiness. Agribusiness revenues was $48 million compared to $52 million in the third quarter of fiscal year 2021. Fresh lemon revenue was $24 million compared to $35 million during the same period of fiscal year 2020. The decreased volume of fresh lemons partially relates to harvesting and logistical delays affecting our industry. As expected, fresh lemon pricing and utilization were strong in the third quarter of fiscal year 2021. However, supply constraint due to the delayed harvest in Chile and Argentina, along with the congested ports throughout the world, have temporarily delayed shipments of many agricultural products, including lemons, into the fourth fiscal quarter. Overall, pricing was $21.34 average price per carton, compared to $17.19 average price per carton last year. Fresh lemon utilization rates were 77% to 80% compared to 57% to 60% in the prior year period. Avocado revenue decreased $4.1 million compared to $6.1 million due to the highly publicized lack of rainfall throughout California and the West Coast, which reduced the overall size of the actual avocado fruit pieces and resulted in reduced pounds sold. Orange revenue was lower in the third quarter as higher volume was offset by lower prices of oranges sold. Turning now to our real estate development segment. Our real estate development project, Harvest at Lima Nera, continues to perform very well and has now closed 556 lots since inception, including 92 new lot closings in the third quarter of fiscal year 2021. We are confident 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 potential upside to our stated cash distributions due to increased number of sellable lots entitled in Harvest at Lima Nera, as well as the potential opportunity of the recently announced medical campus in our East Area 2 development. We are constantly striving to improve our efficiencies throughout all aspects of our business, and you can see the improvements in our operating expenses compared to last year. In order to stay in front of the fast-paced fresh produce industry from tree to consumer, we are implementing a digital transformation we are calling the Farm to Table by a Tablet initiative. This innovative program will monitor daily tree health and fruit growth along with tying together the entire distribution chain from tree to customer dock. This real-time information system will tie the entire One World of Fresh Citrus worldwide team together on one accessible platform to raise yields and quality while increasing the efficiencies of farming, harvest, packing, and sales. This initiative utilizes sensors located in every block of our ranches that gather consistent data on many factors, including moisture levels in the soil and trees, as well as temperature and wind. This data combines with the constant measurement of fruit size, creating models to predict the time and quality of harvest. We then centralize all data to create more predictive algorithms that enable our sales team to improve fresh utilization by matching harvests, fruit grades, and sizes with global client demands. This also improves efficiencies within our harvest and packing teams by ensuring we are being efficient with hiring of labor and distribution needs throughout the year. These measurements will also enable us to be more efficient with our valuable water assets. Throughout the spring and summer, there's been a lot of attention on the current lack of rainfall on the West Coast and corresponding water rights. We are fortunate at Lima Nera to have over 28,000 acre feet of strong water rights covering all of our ranches, including Class III Colorado River water rights, which are in the front of Las Vegas and Phoenix. Each day, water becomes more valuable, and we continue to work to improve the use of this valuable asset. Additionally, we continue to work with local communities to make sure that we are all driving to a sustainable future with this precious asset as illustrated with our tree monitoring system, which tells us exactly when the tree and where the tree needs water. Our water quality and supply is maintained through rigorous lab testing, flotation systems, and a network of microsprinklers to ensure we maximize this asset. Our digital information systems utilize water probes to measure volumetric water content and are connected to data sensors in the irrigation control system. Soil and tree moisture stations then log water data and send it to the main controlling system. We have been proud stewards of our land for over 128 years, and by utilizing technology, we will be able to grow the best crops for future generations. And with that, I'll now turn the call over to Mark.