Calavo Growers, Inc. (NASDAQ:CVGW) Q1 2023 Earnings Call Transcript

Our distributor model for avocados is strong and it’s flexible. And over time, we’ve been able to consistently deliver our targeted gross profit per box. And so that gives me help and comfort. We mentioned in our fourth quarter earnings release that we expect growth in our deli product lines. We are on track to launch 2 national customers with deli items in our third quarter. We know the value proposition in deli is promising. Our value proposition in deli is promising. And that volume growth will help us in the second half as we look at fixed cost absorption and really maximizing the efficiency that we’ve been able to drive in production and yields in labor hours. We will continue, and we have to beat that and drive improvement in every cost line of the P&L.

And we’re making this organization more efficient every day. There isn’t a day that goes by that we don’t worry about yield, input costs, transportation, labor productivity and SG&A, and we’re going to continue beating them on that every day. And ultimately, even though we see some short-term challenges, the categories in which we play, are performing at the better end of the spectrum of all of produce and deli SKUs. Across produce, value-added products perform better than whole commodities. Avocados are one of only the few commodities that delivered year-over-year unit volume growth in Q1. And finally, convenient deli snacks and meal kits led the pack in the deli aisle. So those things give me hope. Our business model is right. We’re working on the right things.

We need to be agile, but we didn’t deliver the results that we expected in this quarter. We need to get better each and every day. And while these challenges have slowed the progress that we expected, we’re quickly repurposing resources. We’re quickly making this organization leaner. We’re focused on gaining sales distribution and continue to deliver sequential cash flow and earnings improvement. And that’s what I’d like to leave you today. I thank you for your time today, and thank you for your continued support of Calavo.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.