Limoneira Co

Q4 2021 Earnings Conference Call

1/10/2022

spk_0: greetings and welcome to don't love minute limit era fourth quarter twenty twenty one earnings conference call at this time all participants are now listen only mode a question and answer session will fall the formal presentation as a reminder this conference is being recorded it is now my pleasure to introduce your host john mills with i see our thank you you may begin
spk_1: great thank you good afternoon everyone and thank you for joining us for women are as fourth quarter fiscal year twenty twenty one conference call on the call to they are held edwards president and chief executive officer and power mountain chief financial officer by now everyone should have access to the fourth quarter fiscal year twenty twenty one earnings release with went out today at approx me four pm eastern time if we have not had a chance to be the release it's available on the investor relations portion of the company's website at lehman era dot com this call is being webcast in a replay will be available a millionaire was web site as well before we begin we like remind everyone that prepared remarks getting bored looking statements and managed with may make additional for 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 companies control and could cause it's 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 because of contribute to such differences in could risk details in the companies didn't use in case file with the fcc and those mentioned in the earnings rules except as required by law we undertake no obligation to update any form of the or other statements herein whether result of new information future events or otherwise please note the during today's called will be discussing not get financial measures including results on adjusted basis we believe these adjusted financial measures to facilitate a more complete analysis and greater understanding of luminaries ongoing results of operations particularly when comparing underlying results from carried the period he provided as much detail as possible and any items that are discussed on adjusted they also within the company's earnings release in today's very remarks week with adjusted he would die which is a non gap on into measure a reconciliation of adjusted ebitda the most directly comparable gap financial measures included in the camp please ten k and press release which have been posted to the website and what that is my pleasure to turn the call of the company's president and ceo mr harold edwards
spk_2: thanks john and good afternoon everyone i'm very proud of the way our team was able to successfully managed through a challenging year due to covet night team and it's effects on logistics and channels of revenue even with these charges we achieve strong fresh lemon utilization in fiscal year twenty twenty one
spk_1: and our brokered fruit business more than doubled in fiscal year twenty twenty one compared to fiscal twenty twenty
spk_2: enabling us to improve revenue and even year over year are outside third party grow returns were extremely competitive this past year as well which should help us with additional outside grow recruiting in the upcoming year we are back to our pre covered growth trajectory that we're getting closer and believe the momentum in our business and expanding brokerage business will attract more third party growlers during our seasonally slower fourth quarter of fiscal year twenty twenty one revenue increased twelve percent compared to the same period last year these results were driven by higher lemon prices and very strong brokered fruit revenue which more than doubled compared to last year lemon pricing improved in the back half of fiscal year twenty twenty one and we expect is trend continued to our fiscal year twenty twenty two we achieved are solid top line results even as the widely publicized global logistical delays continue to affect the entire agricultural industry and reduce exports to asia specifically due to the shipping delays and spoilage occurring in the fourth quarter of fiscal year twenty twenty one we expect to receive insurance compensation in the first quarter of calendar twenty twenty two
spk_1: we are excited about how we are positioned for revenue and earnings growth and fiscal year twenty twenty two and are real estate development project harvest at lehman era continues to performed very well and i'll provide an update on this project in a few moments
spk_2: on now discuss each of our business divisions performances for the fourth quarter starting with agribusiness for the fourth quarter of fiscal year twenty twenty one total net revenue was thirty three point five million dollars compared to total net revenue of twenty nine point eight million dollars and agribusiness revenue was thirty two point three million dollars compared to twenty eight point six million dollars in the fourth quarter of last fiscal year agribusiness revenue for the fourth quarter of fiscal year twenty twenty one includes seven point eight million dollars in fresh lemon sales compared to thirteen point four million dollars of fresh lemon sales during the same period of fiscal year twenty twenty one twenty twenty the reduced levin revenue was due to decrease volume of fresh lemons primarily really added to the timing of harvest and sales year over year but also caused by logistical delays affecting our industry
spk_1: average price card an increase to twenty dollars per card and compared to nineteen dollars and twenty three cents per card and during the fourth quarter of fiscal year twenty twenty
spk_2: the continuation of shipping delays and congested ports throughout the world caused a loss on a portion of our shipments and the balance had to be placed in different channels which specter receive insurance compensation the fourth quarter of calendar twenty twenty two related to the fourth quarter fruit spoilage
spk_1: throughout fiscal year twenty twenty one we made great strides in expanding our one world of citrus initiative and improving our long term growth opportunities we continue to focus on expanding our retail sales opportunities as well as straightening our food service relationships as many restaurants began to open again after
spk_2: coven nineteen
spk_1: we made a strategic decision to dramatically expand our brokered fruit business which offset seasonally slower domestic volumes in the fourth quarter providing supplemental fruit for our global customers
spk_2: we generated seventeen point four million dollars of brokered fruit revenue in the fourth quarter of fiscal year twenty twenty one compared to eight point one million dollars in the same period last year approximately nine hundred and forty one thousand cartons of broken fruit were sold during the fourth quarter of fiscal year twenty twenty one at an average of eighteen dollars and forty four cents average price for carton compared to approximately four hundred and forty nine thousand cards and sold as and eighteen dollar and thirteen cents average price for card and during the fourth quarter of fiscal year twenty twenty brokered fruit revenue is primarily comprise a pack fruit for resale where we are the principal in the transaction turning out to are real estate development division harvest at lehman eric continues to perform very well and as dow closed five hundred and eighty six lot since inception including thirty new lot closings in the fourth quarter of fiscal year twenty twenty one we have now completely sold phase one of this project and are now focused on the five hundred and fifty four law it's for sale in phase two we expect to begin receiving cast distributions this year from harvest at lehman era and fully expect to generate eighty million dollars of cash distributions over the next five years in addition we believe there is upside to our stated cash distributions do the potential increased number of sellable lots and tide
spk_1: old and harvest at lehman era increased values of the remaining sellable lots in the project
spk_2: and the opportunity of the recently announced medical campus in our east area to development in july of twenty twenty one we entered into a non binding letter of intent to sell approximately twenty five acres of our east area to property in five stage purchases to an investment company for the purpose of constructing a medical campus consisting of medical office buildings and an acute care
spk_3: our hospital
spk_2: completion of the transaction is subject to the execution of a purchase and sale agreement and resolution of certain contingencies this potential transaction isn't included in our projected eighty million dollars a cash proceeds and we will provide an update unexpected amount of cash distributions later this year
spk_1: many of you have recently read about the recent rainfall throughout california arizona which is reducing pressure felt by the existing statewide drought the much needed early season rainfall not only helps to replenish groundwater basins but also has dramatically positive impact on three health and vitality as well as brute sizing
spk_2: the past few years of in challenging for our industry we have taken this period of time to become closer with our customers and enhancing or operation through technical improvements such as implementing a real time digital information system we call farm to table by a tablet initiative
spk_1: this is increasing efficiency across our supply chain by monitoring daily tree health and for growth predicting right time to hardest fruit identifying labor and distribution needs and magic harvests fruit grades and sizes to global demand this create greater yields and quality improves efficient the harvest and packing teams and sales teams can improve fresh utilization we also continued to build upon our one hundred and twenty nine years his stewardship of both are natural and human resources by employing sustainable practices in all aspects of operation with our fifteen thousand four hundred acres of rich agricultural land and water assets throughout california arizona she lay in argentina we are well positioned for long term growth through our one world a citrus magiera of meeting our customers year round global demand for citrus and with that all
spk_2: now turn the call over to mark
spk_4: thank you the and good afternoon everyone as a reminder due to the seasonal nature of our business is best of your business on an annual not quarterly basis historically our first and fourth quarters or this easily softer quarters of second or second and third quarters are stronger for the fourth quarter of fiscal year twenty twenty one total net revenue was thirty three point five million dollars compared to total net revenue of twenty nine point eight million dollars in the fourth quarter of the pre devious fiscal year
spk_2: agribusiness revenue was thirty two point three million dollars compared to twenty eight point six million dollars in the fourth quarter last year the increase in revenue was primarily driven by a one hundred and fifteen percent year over year increase in brokered fruit sales in the fourth quarter of fiscal year twenty twenty one other operations revenue was relatively flat to the prior year at one point two million dollars in the fourth quarter of fiscal year twenty
spk_5: twenty one
spk_2: agribusiness revenue for the fourth quarter of fiscal year twenty twenty one includes seven point eight million dollars in fresh lemon sales compared to thirteen point four million dollars during the same period of fiscal year twenty twenty approximately three hundred ninety thousand pardons of fresh lemons were sold during the fourth quarter of fiscal year twenty twenty one at a twenty dollar average price for carton compared to approximately five hundred ninety six thousand carton sold at a nineteen dollar and twenty three said average price for carton during the fourth quarter of fiscal year twenty twenty the decreased volume of fresh lemons partially relates to harvesting and logistical delays affecting our industry we originally expected delayed shipments of many agricultural products including lemons to move from the third quarter into the fourth quarter of fiscal year twenty twenty one however the continuation of shipping delays and congested ports throughout the world called a portion of these shipments to spoil and the balance had to be reworked to quantify we had more than ten ships on a wire carrying approximately seventy thousand cartons of fruits from chile and argentina that went from the a delay of twenty two days to sixty five days we expect to receive insurance compensation in the first calendar quarter of twenty two ninety to for the fourth quarter of fiscal twenty twenty one spoiled fruit the company recognize seventeen point four million dollars of brokered fruit sale in the fourth quarter of fiscal year twenty twenty one compared to eight point one million dollars in the same period last year approximately nine hundred and forty one thousand and cartons of brokered fruit were sold during the fourth quarter of fiscal year twenty twenty one at age eighteen dollar and forty fourth sent average price for carton compared to approximately four hundred forty nine thousand cars sold at an eighteen dollar and thirteen cents average price per carton during the fourth quarter of fiscal year twenty twenty as held mentioned we have focused more on brokered fruit zeal to offset the soft seasonality and will continue to expand that business in fiscal year twenty twenty two
spk_4: the company recognized nominal our total revenue in the fourth quarter of fiscal year twenty twenty one compared to four hundred and eighty two thousand dollars in the same period last fiscal year approximately three thousand pounds of avocados were sold during the fourth quarter of fiscal year twenty twenty one at a one dollar and there
spk_2: eighty six average price per pound compared to approximately four hundred eighty seven thousand pounds sold at a ninety nine cent average price per pound during the fourth quarter of fiscal year twenty twenty the reduction in avocado revenue compared to the prior years due to the highly publicized lack of rainfall throughout california in the west coast which reduce the overall size of the actual avocado fruit pieces and cause the majority of the fruit to be harvested in the third quarter of fiscal year twenty twenty one the increase in average price per pound with due to lower supply of fruit in the marketplace
spk_4: the company recognize not little orange revenue in the fourth quarter of fiscal year twenty twenty one compared to five hundred and fifty one thousand dollars in the same period of fiscal year twenty twenty primarily attributable to praising adjustments in the fourth quarter of fiscal twenty twenty one related to oranges delivered to third party packinghouse
spk_2: his specialty citrus and other prop revenues increased to three point two million dollars in the fourth quarter of fiscal year twenty twenty one compared to two million dollars in the fourth quarter of fiscal year twenty twenty the entries was primarily due to higher volume of wine grapes sold in the fourth quarter of fiscal year twenty twenty one
spk_4: total costs and expenses for the fourth quarter of fiscal year twenty twenty one where forty million dollars compared to thirty nine point three million dollars in the fourth quarter of last year operating loss for the fourth quarter of fiscal year twenty twenty one decreased to six point five million dollars compared to a lot of nine point five million dollars in the fourth quarter of the previous fiscal year
spk_2: net loss applicable to common stock after preferred dividends for the fourth quarter of fiscal year twenty twenty one was five million dollars compared to a net loss of seven point six million dollars in the fourth quarter of fiscal year twenty twenty net loss per diluted share for the fourth quarter of fiscal year twenty twenty one one was twenty eight cents compared to a net loss per diluted share of forty three cents for the same period of fiscal year twenty twenty approximately seven hundred thousand dollars or three cents per share of the loss was due to fruit spoilage relating to shipping issues we expect to receive ensure reimbursement in the first quarter of twenty twenty two related to this voyage a jet adjusted net loss applicable to common stock for the fourth quarter of fiscal year twenty twenty one was four point nine million dollars compared to a lot of seven point six million dollars in the same period of fiscal year twenty twenty which excludes the last on stock in colombo adjusted net loss per diluted share was twenty eight cents compared to adjusted net loss per diluted share of forty three cents for the fourth quarter of fiscal year twenty twenty a reconciliation of adjusted net loss to net large as provided in the end of our earnings release adjusted ebitda was a lot of three point five million dollars in the fourth quarter of fiscal year twenty twenty one compared to a lot of seven point two million dollars in the same period of fiscal year twenty twenty the reconciliation of adjusted ebitda to net loss is also provided in the end of our earnings release
spk_4: for the fiscal year ended oct thirty first twenty twenty one revenue was one hundred and sixty six million dollars compared to one hundred and sixty four point six million dollars in the same period last year
spk_2: operating loss for the fiscal year twenty twenty one was six point three million dollars compared to a lot of nineteen million dollars in the same period last year net loss applicable the common stock after prefer dividends was three point nine million dollars for the first for the fiscal year twenty twenty one compared to a net loss of sixteen point nine million dollars for the fiscal year twenty twenty
spk_4: net loss per diluted share for the fiscal year twenty twenty one was twenty three cents compared to a net loss per diluted share of ninety six cents in fiscal year twenty twenty for the fiscal year twenty twenty one adjusted net loss applicable the common stock was three point nine million dollars compared to a net loss of twelve million dollars for the fiscal year twenty twenty adjusted net loss per diluted share was twenty three cents compared to adjusted net loss per diluted share of sixty eight cents for the fiscal year twenty twenty based on approximately seventeen point six million and seventeen point seven million were three respectively weighted average deluded common shares outstanding we recorded for fiscal years twenty twenty one and twenty twenty in income tax benefit of three hundred thousand dollars and eight point five million dollars on a pre tax loss of four point two million dollars and twenty six point four million dollars respectively
spk_2: the tax provision recorded for the fiscal year twenty twenty one differs from the us federal statutory tax rate of twenty one percent due primarily to for and jurisdictions which are taxed at different rates state taxes now deductible tax items in violation valuation allowances on sir bird tax assets of foreign subsidiaries the effective tax rate of fiscal year twenty twenty one was six point four percent compared to an effective rate of thirty two point two percent in the prior fiscal year the lower tax rate is mainly due to valuation allowances under for tax assets in chile and argentina
spk_4: turning out or balance sheet and liquidity long term debt as of october thirty first twenty twenty one was one hundred thirty point four million dollars compared to one hundred twenty two point six million dollars at the end of fiscal year twenty twenty now i'd like to turn the call back to herald to discuss our feet fiscal year twenty twenty
spk_2: to outlook and longer term growth pipeline thank you mark as we all know the coven nineteen pandemic continues to affect all food service businesses and industry logistics on a global basis
spk_1: even with discontinued continued pandemic we believe we will experience improving results in fiscal year twenty twenty two compared to fiscal twenty twenty one due to are stronger position and grocery and growing brokerage business
spk_2: as food service and export markets recover we also expect lemon prices to increase in fiscal year twenty twenty two compared to fiscal year twenty twenty one
spk_1: specifically we expect total lemon sales volumes to be in the range of four point five million cartons to five million cards for fiscal year twenty twenty two and avocado volumes are expected to be in the range of five million pounds to six mean pounds for fiscal year twenty twenty two we also expect to expand orange volume and for
spk_2: fiscal year twenty twenty two by marketing another producers oranges through our one world of citrus program we have a growing list of customers that enjoy our ability to provide all of their citrus needs for one single supplier and by increasing our oranges we'll be able to attract even more customers in addition we expect to receive eighty million dollars from harvest at lehman era during the next five fiscal years beginning in fiscal year twenty twenty two we believe the breakdown will be as follows fiscal year twenty twenty two is expected to generate three million dollars of cash to leeman era fiscal year twenty twenty three is expected to generate fifteen million dollars this fiscal twenty twenty four is expected to generate twenty seven million dollars fiscal twenty twenty five is expected to generate twenty five million dollars and fiscal year twenty twenty six is expected to generate ten million dollars these expectations from harvest do not clue the potential upside from increased guys have the remaining sellable lots increased number of residential lots we may be entitled to sell at harvest as well as the potential opportunity of a medical campus in our east area to development we expect to be in a position to provide greater transparency on these opportunities later this year lastly to support are expected continued growth we have an additional one thousand acres of non bearing lemons estimated become full bearing over the next four years which will enable us to achieve strong organic growth for many years to come we expect to hundred of the one thousand acres to become full bearing in fiscal year twenty twenty two
spk_1: beyond these one thousand acres we anticipate this additional acreage will increase our domestic supply of lehman her own lemons from our twenty twenty one level by approximately fifty percent or by about nine hundred thousand to one point three million additional fresh cartons as the non bearing and planned a grudge
spk_0: becomes productive and with that i'd like to open the call up to your questions operator at this time we'll be conducting a question and answer session if you're like to ask a question please press star one on your telephone keypad a confirmation total indicate your line is in the question que you may press start to if you'd like to move your question from the que for participants using speaker equipment and may be necessary to pick up your headset before pressing the starches one moment please while we pull for questions
spk_6: our first question is from ben at the end the new with stevens please proceed with your question
spk_7: i got an early the question
spk_6: i bang bang
spk_1: and start asking about that brokerage business so interesting than see the growth in that business sounds like is an interesting growth opportunity to augment the existing growth that you guys have as the bearing acreage role on can you talk about the scale ability of that opportunity one of the constraining factors to growing that
spk_2: and know what should we be thinking about in terms of adding our expectations around how big that that can get greedier happy to so up the real opportunity that we been presented with that business was created by as creating be at the global supply chain model where we have a little bit of our own production we have packing assets that are representing outside growers fruit and now we have customers that have become comfortable with are year round supply capability at both retail and food service and so once that capability was built it allowed us the opportunity now to begin to represent third party shippers and their citrus and typically these are commission based sales opportunities on our commission rates range from anywhere from six percent to twelve percent i think right now our average commission rate is eight percent and up in in terms of the scale ability we feel this is a very very scale of opportunity for us and and at attracting high quality third party shippers into our one world of citrus network we think is just a matter of of finding the right production areas around the world so at this point where sourcing fruit in mexico in chile and argentina and in peru and we see great opportunities to our banter supplement that with additional brokerage opportunities out of south africa and eventually out of spain
spk_1: and in terms of the total volume
spk_2: that we can expect we can probably anticipate growing that part of our business realistically at college twenty percent annually
spk_1: but with with great opportunities to to scale that and grow that at different times of the year when mother nature doesn't give us the up the tree crops that we need to keep our supply chain up to speed now granted it's it's it's lower margin business
spk_2: then are vertically integrated production packing marketing and and they're selling business but it but it doesn't cost us anything to get these these deals other than the time to meet the shippers and that their quality so we think it's a very scale of all our opportunity for us and one that death will really allow us to play loved the holes as mark was saying earlier in his comments in our seasonally soft quarters in our first quarter and our second quarter and our goal will be to keep our supply chains growing consistently throughout the year where we're selling an equal amount of fruit in the off seasons by sourcing the these are these agency or brokerage deals
spk_8: at at i just might add and that he had the opportunity one obviously the would herald alluded to that there's no capital of oven and really it's just human capital seldom the cost to get these you know me to ten percent average across the board deal is very minimal and also allow us to begin to think about these values
spk_9: add services we can provide to these growers in other countries whether weathered logistics additional bagging to our dc than one not self really opens up that only tried forth
spk_6: okay that's great super interesting
spk_2: i would ask about the spoilage and the logistics delay at the boards can you talk about where we are today
spk_1: sitting back to normal and then if you have any sense yet the can you talk about what you think the insurance protein might look like in the first quarter mixture
spk_2: happy to ban saw all i'll dig into the where we are today and and mark and talk about expectations from insurance so the good news for us in terms of our where we are in the seasonality of our fruit is were not importing any fruit from the southern hemisphere right now all of our production today is coming out the the desert and then are out of the san joaquin valley in nap in california and so we're not experiencing any negative impacts on our on our supply chains or shipments because everything is being source domestically as it relates to our exports we're still seeing soft demand from ah our from are asian partners and and the asian markets are still suffering from the impacts of the of the pandemic so that good news bad news that the good news is it our business is not being severely impacted because of the logistical delays bad news is markets are still suffering from colvin and
spk_1: pandemic and and softer food service demand in those markets
spk_2: we we do expect that by the time those markets become healthy and open up that the supply chain issues will be well down the road to being resolved but we can tell you that as we drive you know down into los angeles in that area and you look out in the harbor there still a lot of ships that are for they're so we know they're not through their their challenges but we are reading about improvements and things getting better the real issue for us ban will will come in the add the mid to late summer when we we go back to a model of our supply chains being dependent on that southern hemisphere fruit and will be very cautious about bringing fruit in the the west coast ports and probably err on the side of breed more deliveries to the east
spk_4: curse markets and using trucking to bring at west to avoid the congestion and and then fell from the from the insurance inside it's it's a dog little complicated one there's multiple carriers involved allen when you're talking about seventy down the current but we had some legal opinions done from are turning down and and looking at all the contracts and we think for that the minimum level is about three hundred thousand dollar
spk_8: lawyers them and that's specifically rated to just reimbursement of transportation costs and then all the way up to about one point three million dollars potential like that has little hopefully baltimore in the middle the rain hours that try to put a specific finger on it but down again the attorneys that we had done yet within the contract
spk_6: it's
spk_0: some leverage their self or work that and then we should see that next three months
spk_2: yeah okay great thanks last question for me is carol he talked about the rain it can you tell ya what that might mean for your trees and how much more rain do we need to start to get back to normal i know we're a long way from normal against a sense of the impact them what they hear that yes so it actually is a very very positive thing just maybe to start with the negative side
spk_1: so what it did as it meant that in december we weren't able to get to pick for twelve days and so call it two weeks and so what that's done is that pushing are expected result out by two weeks so i think from a pragmatic perspective it's gonna mean that were
spk_2: we're gonna be a softer first quarter than we thought but a stronger second quarter than we thought
spk_1: and so just up into the extent that you can move some of those those forecasts around i think that's that's probably something to that we to think about
spk_2: and and then as it relates to the overall situation of the ongoing drought in california having this much rain this early went a long way to replenishing empty awkward acts and groundwater basins and you're seeing now we're not back to what we would call healthy as it relates to the large storage facilities that exist throughout the state of california but the other aspect of the reins that maybe isn't getting as much attention but is a godsend for all of us is the amount of snow that has has
spk_10: take him that we received in the sierra nevada mountains and now that is what provides most of the san joaquin valley is water rights which are riparian rights through the rivers and streams that flow from the snow melts as that takes place in the late spring in the early summer and that's gonna go a long way to
spk_11: really filling up our agricultural canals and giving us access to a two additional water that been about six months ago we were in a very dire situation
spk_2: so you know bottom bottom line is it's it's been a wonderful series of storms and rains were hopeful that does that we're not through with them for the season i think we still have several months where we can expect more rain but death but certainly we're off to a great start and it's just a making the entire agricultural community and cal
spk_4: horn yeah
spk_9: for yappy
spk_1: and in bed with the and glimmer at does that from the harvest the life perspective typically this this time of year if we can't get in the field or harvesting about a hundred zero hundred and twenty five thousand part of the week so do the map on on twelve weeks or top aides gives me and i probably pushes of
spk_2: two to her down the carton from the one in you do not off budget mood
spk_0: okay though helpful thanks
spk_12: good luck with this night with clear thanks ben present it like you our next question is from jerry sweeney with roth capital partners please proceed with your question
spk_13: a good afternoon house and tactic michael i j
spk_14: ah
spk_12: logistics of brokers were a top of my mind but that has recovered and i did have wanted to talk a little bit more
spk_2: maybe give a little bit more detail i'm on the opportunity on the grocery side it's obviously been an area of focus the past year
spk_1: as covered
spk_2: impacted by but
spk_1: which one opportunities there longer term does that cover the same carry the same at the march
spk_2: so exactly the same economics in margins as as food service and the exciting part of that channel for us there's too exciting parts do it one our growing in that channel just through gaining market share and so we believe it's sustainable but the other really exciting part of it is a very high percentage that business has additional value added benefits
spk_15: to us were able to up derived more margin and more value added benefit through bagging and and i guess the final benefits of that which is is very exciting is that it gives us a lot more flexibility with the size and the grades that were able to serve our our retail customers with a
spk_14: and and why that super important and and exciting for us is that at customers are pretty open to sizing and grades in in in the bag format and that gives us the opportunity to really be able to focus on the areas of the size and grades were we have build up of inventory so really help
spk_16: this with our utilization and and selling more lemons fresh bore also able to to capture look bit more value added through the bagging service there we think it's it at as super exciting part of our business and as we continue to grow with our with our total volume growth i think thinking in terms of fifty percent retail and fifty
spk_12: the percent food service is very achievable and that has very strong implications for our ability to generate more value added benefit for for rp in l as we grow
spk_17: got it
spk_18: and then
spk_12: officer
spk_1: also want to ask about but
spk_2: excellent my mind ah
spk_4: on the logistics side i know you're targeting maybe bring and
spk_2: for to east coast
spk_12: how much of a cost to fragile and packed with that have to the east coast and shifted from their tracking
spk_14: so it adds another marty you do have a do you have a figure that you would use for that per carton
spk_12: and it's it's about four to five dollars depending and but the season on the alley where we are have typically but done yet we thought i was the incredible trucking ranger are still somewhat difficult and and
spk_19: and you know then the mired port situation so
spk_20: in a world where you are trying to figure out what the this with that but of use them for five dollars additional probably as good as any for the moment
spk_1: and jerry a lot of that a lot a lot of that gets passed through to the customer amp a nap not that we not that we wanna do that by the if if a customer is is sort of facing that cost increase or not being able to get a delivery usually opt for the cost increase
spk_2: got it that one question what i did one after that my mind i bother with have you gotten how his food service booking today and i were kind of gone through ups and downs come across took off a little bit by how it looking
spk_1: october november december time frame
spk_2: and end of the thought worry about
spk_12: of couple weeks ago
spk_21: yeah that there was that there was a euphoric response to restaurants reopening and people
spk_0: being able to go out to congregate and eat in restaurants again so we actually saw spike up and demand that's fallen off a little bit but by and large we're we're very strong restaurants are open
spk_22: people are people are eating out and so demand at food service is robust again the that the primary area of difficulty as i was mentioning earlier is jet is still in the export markets and and and and why that really matters to us is so that's primarily our fancy fruit but we can capture up to a five dollar premium on those sales so by not having that we're very fortunate mother nature gave us a higher percentage of fancy fruit this year versus last but because we're not able to slip that
spk_4: into that those premium export markets we're not seeing at least at this point as big a lived in the overall aggregate pricing as we'd hoped that and that's all just because the asian demand remain soft after the top of okay i appreciate that flood
spk_2: thank you
spk_4: or next question is from then them with lake street capital markets please proceed with your question
spk_1: i take my questions that first follow up question on the brokered freak business marquee talked about the fourth quarter numbers than the euro we are proven i see some of those reflected in the ak as well and the i don't know if you said what that business was a four year basis if you dare i apologize look do i could you bad
spk_22: give that information for fiscal twenty one and growth over fiscal twenty
spk_23: yeah we didn't we didn't matter that by damn right now it's about a twenty five million dollar business up significantly in over one hundred percent year over year
spk_22: the energy out a little too i think conservatively we're we're targeting twenty percent growth from there but them you know as as we talked about him and are an investor and decks and and that path is our aldermen intentions you know over the next five or seven years and to take the business to thirty million and of citrus of which were ten million today so clearly that and have a lot of implications to the brokered side so now it's going to be a focus for us in this sort of at that light world
spk_1: and will continue to do that and and and have those value added services and i think i take them as then i think it generated two point three million dollars of operating profit for us to an insider a herald of that two point three and four quarters that full year
spk_2: now that was double your year okay perfect on very interesting looking for the more information on that here and quarters to come on now the question how do touch on the rain i use a diet as you come to the give there's twelve days you get can harvest i have a few years ago and there was a dramatically more rain and for longer period of time that kind of skewed the signing of for you for all know for for for basically all domestic production learn a friend that years that there's really any kind of material impact in in kind of size and grade or or would that not not enough rain or not long enough for him to do that now that that's a great question i appreciate it because i was going to try to leave a comment in there about it so that rain and series of rain events kept us from harvesting for eight weeks so this was this was two weeks and and so we don't anticipate the build up of sizing we we see good movement on the fruit as it exists today
spk_22: so i don't think it'll have any disruptive or negative impact on our supply chain i think i think it was a by a larger a perfect rain with with perfect results i'm at this point and the one thing that pup to make maybe mention is that
spk_2: avocados should said receive a huge benefit from this from this rain natural rain rainfall accelerates the the growth and size of avocados and you know we sell to our customers by the peace but we're we're paid are compensated for a production by the pounds
spk_1: so the same number of pieces if you can get an increase in size and the average size it can it it can improve the amount of pounded you have by twenty to thirty percent so it can be it can be material so we think we're we're we're in a really great spot with the other it's too early to say that that's happened or happening but what will keep you posted because our our our our avocados
spk_2: first of all the hate the wind and they love the rain and we've had fewer wind events this year versus last and we had more rain events so off to a good start for twenty twenty two with the avocados gotta gotta help of on one last one for me i were going carbon pricing or the on the third quarter call you know and mid whoa them in september and kind of commented that there was that pricing at that point where the most kind of low twenty twenty two twenty three s range and the full quarter and other twenty can you talk to me about can help
spk_22: i of all throughout the quarter and one of the need a you know what if anything in the back half the coral under token of a lower lower price than than will come on and on and and mid september
spk_24: sure so that the the two drivers of your price are are gonna be
spk_0: your product mix so the difference between a eight your sales between what your anticipated percentage of fancy your percentage of choice and your percentage of standards so we had a lower percentage of fancy fruit than we anticipated that so that was the one piece of more choice more standard as a product mix in in total which brought the average price of those grades down and then the other impact was a build up in the industry have more choice fruit that the that that put more
spk_25: pressure based on this the choice grade and the the impact was in oversupplied situation which was dealt with by some of our competitors with price and that drag the whole market down
spk_26: and they've got not as so it's specifically really related to the desert cadiz and it's so windy out there we we at all that choice rude but a child mentioned are expected percentage of fancy will be higher in twenty twenty two than twenty twenty one
spk_6: got okay very and adding that that the for me thanks to take my question and i'll get back and you
spk_1: thanks ben
spk_27: as a reminder if you'd like to ask a question please post star one hundred telephone keypad a confirmation total indicate your line is in the question que you may press start to if you'd like to remove your question from the que
spk_25: our next question is from erik larson with support research partners please proceed with their question
spk_2: yeah thanks for the question hi guys
spk_1: eric eric
spk_2: go on my question is and i may have missed this year your utilization fresh lemon utilization one up pretty sharply for the entire year which is generally a which is normally very beneficial did you give did you and i may have missed mrs did you give the full year fresh utilization rate and how how's how that improve going forward do you look at it and of your what should we be modeling
spk_1: yes so a great question thank you for that so twenty twenty one was the year of dramatic recovery in fresh utilization which was a function of several things one certainly the the rick the recovery of food service which created more market demand but then but then the second thing was our team just did a great job in coordinating and forecasting what are what our production and are affiliated growers production was gonna be anticipate hate it when it would be harvested and what it would be at the time of harvest and then work out in front of that with our customers setting up programs to be able to move the fruit once it was harvested and made available and we did not provide a full year utilization rate but it came in at at about seventy eight percent for the for the year
spk_2: which up compares to i think fifty percent was where we wound up the prior year as as you build your models and you think gonna go for basis we believe that we we've made the appropriate investments into technology information systems and we just you not at the end of story have a great team that that really do a great job out there in the in in the team work that's required to keep good hi you realisation that i would expect him to be anywhere from the seventy five to the eighty percent fresh utilization across all the districts in throughout california arizona okay great that that's that's great yeah i know that it's kind of once you get north and seventy is one starts having have a pretty positive impact on your european el sol and is it possible to get something north of of let's say that seventy five eighty percent range or would that be more the norm wise
spk_28: ooh that's who we think that it's a normalized range
spk_2: yeah so so great question different answers for different districts so when you grow in areas that have extreme climate like arizona where it gets really hot then you know obscene maximum utilization at death you know seventy five percent is probably the most we could we could probably expect but when you get up into the san joaquin valley where there's very little when and it's it's really a just the perfect place to grow lemons the you have you have utilization opportunities potentially ninety percent there and then and then as it comes to the california coast it's all how much when we get and so if we get a lot of east wins which we have not had knock wood this year then you know i think expectation of mid to low seventy percent fresh utilization but if you can avoid the big wind events it's possible to get up to eighty percent
spk_1: when you put the whole thing together i think the most we've ever seen is probably you know average across all districts is like low eighty percent that's probably the best we can hope for as and other things that add their kids is you know that the the press lemonade content or two were were still developing we've had that great customer rating game you're adding one or two more players like that and to suck up that otherwise fruit they would have gotten the jews for two dollars and selling below the standard i am is is that opportunity as well
spk_29: okay he that a fall block on that
spk_2: and what one other comment just because i don't think we incorporated this into our art are all of our comments but in all of the tree crops across each to the district's the desert district read the valley district one and you're on the coast district to the tree crops in all of the regions are up this year meeting there's more lemon and that if we can get these higher utilization
spk_1: it means we'll have a great opportunity get you know up to that five million carton high end of the range of of sales this year so we've got everybody focused in on that and nap nother the rain at this point should help that too so that's that's our internal goal this year
spk_30: okay and just one other quick follow up question here
spk_0: yeah yeah you talk about the thousand acres of coming on your over the next four years you're saying that about two hundred of those acres come this year
spk_2: will this be the first year for harvesting and and i think it takes what he be two or three years to really can't get to your cannell running full tilt and production with a new up with new acres could you help with that with that hero
spk_0: yes so that this the sound bite is when you when you plant a tree it takes three years before you get to be getting of production and it takes seven years to get the full bearing production so out of the of of the thousand acres you're seeing two hundred of those at year for
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