Limoneira Co

Greetings and welcome to the Lee Monero's 4th Quarter Fiscal Year 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow a 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 Lee Monero's 4th Quarter and Fiscal Year 2024 Conference Call. On the call are Harold Edwards, President and Chief Executive Officer, and Mark Palamountain, Executive Vice President and Chief Financial Officer. By now, everyone should have access to the fourth quarter fiscal year 2024 earnings release, which went out today at approximately 4 p.m. Eastern Time. If you have 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 Lemonera'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, including risk detail in the company's Form 10-Qs and 10-Ks filed with the SEC and those mentioned in the earnings release. Except if it was 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 Lemonera'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, in the company's earnings release and in today's prepared remarks, we included adjusted EBITDA and adjusted diluted earnings per share, which are non-GAAP financial measures. A reconciliation of adjusted EBITDA and adjusted diluted EPS to the most directly comparable GAAP financial measures are included in the company's press release, which has been posted to its 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. We are extremely pleased with our fourth quarter and full fiscal year 2024 results. For the full year, net revenue grew 6% to a record $191.5 million, and adjusted EBITDA was $26.7 million, compared to a loss of $224,000 for fiscal year 2023. We achieved avocado and lemon volume guidance for the year. In fact, the 15.1 million pounds of avocados sold in fiscal year 2024 was the most volume sold in almost 15 years. These overall results demonstrate the strength of our agricultural platform and validate our strategic decision to expand our avocado production by 1,000 acres through fiscal year 2027, which is expected to drive significant EBITDA growth. In addition, our lemon offering is achieving increased penetration in the food service and quick service restaurant channels, and we expect more meaningful market penetration in fiscal year 2025. Our agricultural success combined with a compelling portfolio of real estate assets, valuable water resources, and a strong balance sheet create multiple potential pathways to build lasting stockholder value. As an example, our residential joint venture with the Lewis Group of Companies for the Harvest Real Estate Development Project continues to perform very well, and we anticipate meaningful water monetization transactions in fiscal year 2025. In addition, we continue to explore strategic alternatives for our assets and are very pleased with the interest. We remain committed to thoroughly exploring all options to maximize stockholder value and will provide updates if the Board of Directors find that further disclosure is necessary or advisable. In fiscal year 2024, we achieved two significant real estate milestones. First, in April, our joint venture with Lewis closed on lot sales representing 554 residential units, thus completing the sellout of phase two of the development. A total of 1,261 residential units have closed from the project's inception. Second, in May, we announced the Santa Paula City Council approved the joint ventures proposal to increase the total number of residential units for the project from 1,500 to 2,050 units. The 550 unit increase will provide 250 additional single family for sale home sites within phase three of harvest. A separate joint venture with Lewis plans to construct 300 multifamily rental homes on a mixed-use portion of the project. This is a 37 percent increase in dwelling units, unlocking further value creation opportunities. Based on these events and the expected continued increase in land value associated with this project, we increased our cash flow projections by 46 percent in June and expect to receive $180 million in total proceeds spread out over seven fiscal years, with $15 million received this year. In addition, in December of 2024, we received approval from the Federal Emergency Management Agency, or FEMA, to revise a flood zone map area effective May 15, 2025, that significantly reduces the number of property owners that are required to pay flood insurance within East Area 1, East Area 2, and other real estate within the flood zone area west of Santa Paula Creek. Within East Area 1, approximately 1,100 existing and future residents will not be subject to mandatory flood insurance due to the revised flood zone map. It has been a time of intensive process as we have been working with various public agencies since 2020 to correct the FEMA flood zone insurance rate map. Revising the flood zone map is expected to improve future interest in residential and commercial real estate in these zones. as it removes the concern of flooding and the cost of mandatory flood insurance. Turning to our balance sheet, our net debt as of October 31, 2024, was $37.6 million. Additionally, our 50-50 real estate development joint venture had $66.9 million of cash and cash equivalents as of October 31, 2024, of which 50% is approximately $33.5 million. The joint venture currently has no debt. We consider this approximately $33.5 million as an offset to our net debt position of $37.6 million. Now to provide a quick update on a decision to evaluate strategic alternatives for the overall business. Today, we consider ourselves to be a very strong financial position, having recently reduced our net debt position and right-sized the balance sheet through our ongoing strategic shift towards an asset-lighter business model and with stronger cash flow projections from harvest at Libanera. Since announcing our exploration of strategic alternatives, we have received significant interest and are diligently working with our advisors to evaluate these potential opportunities. We remain committed to thoroughly exploring all options to maximize stockholder value and will provide updates if the Board of Directors find that further disclosure is necessary or advisable. Even after the recent non-strategic asset sales over the past year and a half, we continue to manage approximately 10,500 acres of land with approximately 21,000 acre feet of owned water. usage and pumping rights represented tremendous long-term value growth opportunities from our assets. You can see by our improvement in agribusiness operating income during the fourth quarter and full year, our transition to an asset lighter business model and focus on the best use of our assets to enhance stockholder value is having a positive effect. We removed our pension obligation, achieved our significantly increased volume guidance for fiscal year 2024, and are monetizing water through a following program with the Yuma Mesa Irrigation and Drainage Ditch. And with that, I'll now turn the call over to Mark.