Limoneira Company (NASDAQ:LMNR) Q1 2023 Earnings Call Transcript

I think as you might remember, Eric, the District 2 crop is always there, because the trees are blooming here year round. So we do have access to good amounts of fruit. Inventories are good. And unlike 2019 where we had that situation where the lemons got big because we weren’t able to get into harvest, we’re all over that this year and making sure that that does not happen, and trying to make sure that our inventories are balanced by size and grade so that we can keep the supply chains cooking right along even with this weather.

Eric Larson: All right. Thanks. I’ll get back in queue.

Operator: The next question comes from Raj Sharma from B. Riley. Please go ahead.

Raj Sharma: Hi. Thank you for taking my question. I had a — sort of following up on the lemons, you just mentioned that you expect a significant pickup in the cartons with improved pricing. Where is this increased production going to come from? Can you talk about that? I know you said there were external growers as well. And also, you did just talk about why you thought the pricing was going to improve and that was going to be a second half event. What kind of a pricing increase can we expect on lemons?

Harold Edwards: Hi, Raj. That’s a great question. I wish I could answer that directly with my crystal ball. But what we know is that we’re behind in our harvest up in the valley, and kind of on par with our harvest for the remainder of the season on the coast. And as we look at our tree crops, we have ample production of our own production. But also we were successful in recruiting an additional 1 million cartons of new fruit across all three of the districts that are in combination with our own production and the grower partners that we serviced in 2022. And so even though Mother Nature brought us a lower tree crop of about 15% across each of the districts, our recruiting actually give us great belief that we’ll be able to grow and have access to enough fruit.

And so we’re still sort of hanging on to our guidance of 5.2 million to 5.4 million cartons for the year, which would demonstrate some pretty good growth year-on-year. I think we finished last year with 4.9 million cartons. And so the fruit is there and we’ve got enough time to go get it and the weather is not causing that much disruption at this point in terms of changing size or grade structure. So we’re optimistic that we’ll be able to get it and put it through the packinghouse and get it into the market.

Mark Palamountain: Yes. And to follow up on pricing, as Eric asked earlier, it all comes down to that supply-demand balance from the imports that typically start from Argentina in late April, early May. So if the transportation costs aren’t there, if the price isn’t high enough for them to break even, we’ll usually get a $2 or $3 lift from current pricing, which is right about just below $18 right now. And then Mother Nature does the rest of her thing. But that’s historically how we’ve looked at it from a budgeting perspective.

Raj Sharma: That’s great. Thank you. And then on the avocado production, clearly lower this year than last year. How much of a recovery do you see in Q2 onwards? What’s happening on the production side? Are you going to be able to recover a lot of it, most of it? Can you talk about that please?