Limoneira Co

Greetings and welcome to Lemoniera's fourth quarter fiscal year 2022 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. 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 Air's fourth quarter fiscal year 2022 conference call. On the call today are Harold Edwards, President and Chief Executive Officer, and Mark Pelhamountain, Chief Financial Officer. By now, everyone should have access to the fourth quarter fiscal year 2022 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 limanera.com. This call is being webcast, and a replay will be available on Limanera's website as well. Before we begin, we would 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 10Qs and 10Ks 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 measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Luminaire'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, adjusted net loss for diluted EPS, and diluted net loss per common share, which are non-GAAP financial measures. A reconciliation of adjusted EBITDA, adjusted net loss for diluted EPS, and diluted net loss per common share to the most directly comparable GAAP financial measures are included in the company's press release, which has been posted to our website. And with that, it is my pleasure to turn the call over to the company's president, and CEO, Mr. Harold Edwards.

Thanks, John, and good afternoon, everyone. I'm pleased to report that our diversified portfolio of revenue drivers enabled us to achieve record revenue in fiscal year 2022, growing our top line by 11% to $184.6 million and generating $11.9 million of adjusted EBITDA. Our seasonally soft fourth quarter also saw growth over the prior year with revenue increasing 18% to $39.7 million. We realized strong full fiscal year 2022 growth in both our avocado and orange revenues driven by increased demand and pricing almost double the prior year. It was an extraordinary year in avocados with volume and pricing increasing 44% and 73% respectively over the prior year. Fresh lemon volume also grew. However, the pricing environment remained difficult for most of the year as domestic and global lemon markets continued to work through a surplus of inventory. This overall pricing pressure has continued into fiscal year 2023 due to the oversupply in the global marketplace. However, we expect seasonal price increases beginning in our stronger second and third quarters. We are working to help insulate ourselves for the volatility of commodity pricing by expanding our third-party fruit supply, whether it be packed, marketed, and distributed by Limonera, or just marketed and distributed by Limonera. We are a leading global producer, packager, and marketer of citrus, and our expertise, along with the investments we have made in technology to provide growers insight and transparency into their operations and the investments to our supply chain, have made us an attractive partner to outside growers. Today, roughly 60% of our source volume comes from third-party fruit, and our goal is to increase that to 75% as we pivot towards an asset lighter model. This will help reduce the impact of pricing volatility and rising farming costs. Another prong of our strategy is monetization of certain assets. One monetization project that has been underway for some time is our Harvest at Lima Nera development project. We closed phase one at the end of fiscal year 2021 and are currently on hold for phase two. The good news is we have a minimal amount of debt on this project and we are in talks with the city of Santa Paula to expand from 1,500 total residential units to 2,000 units. We received $8 million in cash proceeds from harvest in the fourth quarter of this fiscal year when we closed the sale of a 17-acre property. The land will potentially be used to develop an additional 200 or more residential units within harvest. We've increased our cash proceeds projection by over 20% to $115 million and updated our timeline to include both the harvest development and the harvest medical pavilion across the street which I will discuss in more detail at the end of the call. In addition to harvest, we have identified over $150 million of assets for monetization as well. We own over 15,400 acres of rich agricultural real estate properties and water rights in California, Arizona, Chile, and Argentina that have been acquired over the past 130 years since our company was founded. There is a meaningful difference in the current fair market value of these assets compared to the book value because many of these assets were acquired many years ago at low cost basis. In October, we announced the sale of our Oxnard packing facility for $20 million, and shortly after, in early December, we announced another asset sale, our Sevilla property, for $2.6 million. The proceeds from these sales have been used to reduce our debt and right-size our balance sheet. We will continue our transition to an asset lighter business model, which includes streamlining our operations, improving consistency of earnings, and increasing EBITDA and dividends per share once the transition is complete in the next 12 to 18 months. Lastly, I'd like to provide an update on our ESG initiatives. This past year, we increased our focus on governance with a refresh of our board, appointment of new chairs of our committees, and we work methodically through governance and compensation approaches. This combined with many other initiatives enabled us to improve our ESG score by 40 percent from an average of 7.6 to now 4.6 as of December 2022. One area I'd like to highlight that has changed in the past year is our shareholder mandated clawback policy, which has been updated to better align management with our shareholders. This includes minimum holdings for executives, compensating executives directly for monetization initiatives, aligning executional performance with shareholders to maximize gains on asset sales. And with that, I'd now turn the call over to Mark.