What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-09-09 compared with 2020-06-09 · 262 added, 214 removed, 418 unchanged (53% of the section changed)

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We are one of the largest growers of lemons and avocados in the United States.

We market and sell lemons directly to our food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia and certain other international markets.

During the six months ended April 30, 2020 , lemon sales were comprised of approximately 71% in domestic and Canadian sales, 26% in sales to domestic exporters and 3% in international sales.

Additionally, we had approximately $1.5 million of lemon and orange sales in Chile by PDA and San Pablo and $2.5 million of lemon and orange sales in Argentina by Trapani Fresh in the six months ended April 30, 2020 .

We sell our oranges and specialty citrus to Sunkist-licensed and other third-party packinghouses.

We sell our pistachios to a roaster, packager and marketer of nuts, and our wine grapes are sold to various wine producers.

We market and sell lemons directly to our food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia, Europe and certain other international markets.

We had approximately $2.1 million of lemon and orange sales in Chile by PDA and San Pablo and $12.1 million of lemon and orange sales in Argentina by Trapani Fresh in the nine months ended July 31, 2020.

We sell a majority of our avocados to Calavo.

Additionally, we sell our oranges and specialty citrus to Sunkist-licensed and other third-party packinghouses, our pistachios to a roaster, packager and marketer of nuts, and our wine grapes to various wine producers.

Historically, our agribusiness operations have been seasonal in nature with quarterly revenue fluctuating depending on the timing and variety of crops being harvested.

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The first phase of the project broke ground to commence mass grading in November 2017.

The Joint Venture has closed on lot sales representing 244 units through April 30, 2020 .

The Joint Venture has closed on lot sales representing 354 units from inception through July 31, 2020.

For further information see Note 7 – Real Estate Development of the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.

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After transaction and other costs, we expect to receive proceeds of approximately $2.6 million and recognize an insignificant gain.

At April 30, 2020 , the $2.5 million carrying value of the property was classified as held for sale and included in prepaid expenses and other current assets.

At July 31, 2020, the $2.5 million carrying value of the property was classified as held for sale and included in prepaid expenses and other current assets.

In March 2020, we entered into a revolving equity line of credit promissory note and loan agreement with Farm Credit West for a $15.0 million Revolving Equity Line of Credit (the "RELOC") secured by a first lien on the Windfall Investors, LLC property.

The loan matures in 2043 and features a 3-year draw period followed by 20 years of fully amortized loan payments.

The RELOC matures in 2043 and features a 3-year draw period followed by 20 years of fully amortized loan payments.

The interest rate is variable with monthly interest-only payments during the 3-year draw period and monthly principal and interest payments thereafter.

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Net proceeds from the sale were $11.0 million and we recognized a loss of $6.3 million.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law.

The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property.

We have evaluated the impact on our consolidated financial statements and estimated the impact of approximately $1.4 million of income tax

Recent Developments (continued)

benefit and $4.9 million federal refund as a result of the CARES Act.

We have evaluated the impact on our consolidated financial statements and estimated the impact of approximately $2.0

million of income tax benefit and $6.4 million federal and California refunds in calendar year 2020.

We anticipate we will benefit from the utilization of net operating losses, the technical correction for qualified leasehold improvements eligible for 100% tax bonus depreciation and potentially other provisions within the CARES Act.

On March 12, 2020, the Board of Directors of our Company approved a share repurchase program authorizing us to repurchase up to $10.0 million of our outstanding shares of common stock through March 2021.

Under the share repurchase program, purchases of shares of common stock may be made from time to time in the open market or in privately negotiated transactions.

The share repurchase program may be modified, suspended or discontinued at any time and does not commit us to repurchase shares of our common stock.

During the quarter ended July 31, 2020, we repurchased 42,100 shares under the share repurchase program for approximately $0.6 million.

As of July 31, 2020, the remaining authorization under this program is approximately $9.4 million.

On June 30, 2020, we entered into a Conversion Agreement with Farm Credit West to convert our term loans to fixed interest rates effective July 1, 2020.

No changes were made to the outstanding principal balances on the loans and no cash repayments of principal were made by us.

The rates are subject to a prepayment restriction period for a portion of the fixed rate term that will expire on January 1, 2021, after which we may prepay any amounts without penalty.

In June 2020, we entered into an agreement to sell a property, located in Lindsay, California, for $6.0 million.

The transaction closed on August 26, 2020 with us receiving net proceeds of $6.0 million.

After transaction and other costs, we recorded a loss of approximately $0.3 million as of July 31, 2020.

For fiscal year 2019, we declared cash dividends to our stockholders totaling $0.30 per common share in the aggregate amount of $5.3 million.

On July 13, 2020, we declared a cash dividend of $0.075 per common share, which was paid on July 17, 2020, in the aggregate amount of $1.3 million to common stockholders of record as of July 6, 2020.

On April 15, 2020, we declared a cash dividend of $0.075 per common share, which was paid on April 19, 2020, in the aggregate amount of $1.3 million to common stockholders of record as of April 8, 2020.

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The export market for fresh product has also significantly declined due to COVID-19 impacts.

The decline in demand for our products during the second quarter of 2020, which we believe was a result of the COVID-19 pandemic, negatively impacted our sales and profitability for the second quarter of 2020.

The decline in demand for our products beginning the second quarter of 2020, which we believe was a result of the COVID-19 pandemic, negatively impacted our sales and profitability for the second and third quarters of 2020.

We also expect an adverse impact on our sales and profitability in future periods.

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Risk Factors of this Quarterly Report.

Although subject to unforeseen changes that may arise as the COVID-19 pandemic continues to unfold, we currently expect improvement during the second half of 2020, specifically as restaurants and bars begin to reopen.

Although subject to unforeseen changes that may arise as the COVID-19 pandemic continues to unfold, we currently expect improvement during the fourth quarter of fiscal year 2020 and into fiscal year 2021, specifically as restaurants and bars continue to reopen.

We took proactive actions early on to protect the health of our employees and their families, including curtailing business travel and encouraging video conferencing whenever possible.

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Given the economic uncertainty as a result of the COVID-19 pandemic, we have taken actions to improve our current liquidity position, including temporarily postponing capital expenditures, selling equity securities to increase cash, reducing operating costs, and substantially reducing discretionary spending.

We are one of the largest growers of lemons and avocados in the United States and maintain our country's food chain infrastructure and thus were considered an essential business and permitted to remain open during the second quarter of 2020, be it at reduced volumes, in order to fulfill our customers' needs.

We are one of the largest growers of lemons and avocados in the United States and maintain our country's food chain infrastructure and thus are considered an essential business and permitted to remain open during the ongoing pandemic, be it at reduced volumes, in order to fulfill our customers' needs.

However, there is significant uncertainty around the breadth and duration of our business disruptions related to the COVID-19 pandemic, as well as its impact on the U.S.

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The following table shows the results of operations (in thousands):

Three Months Ended April 30,

Six Months Ended April 30,

Three Months Ended July 31, Nine Months Ended July 31,

2020 2019 2020 2019

Agribusiness $ 52,387 $ 49,631 $ 131,309 $ 131,254

Other operations 1,172 1,238 3,477 3,668

Total net revenues 53,559 50,869 134,786 134,922

Costs and expenses:

Agribusiness 46,826 42,747 125,318 118,741

Other operations 1,010 1,043 3,396 3,269

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Total costs and expenses 51,745 48,751 144,271 136,829

Operating loss:

Operating income (loss):

Agribusiness 5,561 6,884 5,991 12,513

Other operations 162 195 81 399

Selling, general and administrative (3,909) (4,961) (15,557) (14,819)

Operating loss

Other (expense) income:

Operating income (loss) 1,814 2,118 (9,485) (1,907)

Other income (expense):

Interest expense, net (92) (774) (1,089) (1,313)

Equity in (loss) earnings of investments

(Loss) gain on stock in Calavo Growers, Inc.

Other (expense) income, net

Total other (expense) income

(Loss) income before income tax benefit (provision)

Income tax benefit (provision)

Net (loss) income

Equity in earnings of investments, net 832 480 341 2,449

Loss on stock in Calavo Growers, Inc.

— (1,775) (6,299) (2,073)

Other income, net 11 15 246 375

Total other income (expense) 751 (2,054) (6,801) (562)

Income (loss) before income tax (provision) benefit 2,565 64 (16,286) (2,469)

Income tax (provision) benefit (765) (461) 5,876 216

Net income (loss) 1,800 (397) (10,410) (2,253)

Net loss (income) attributable to noncontrolling interest 509 (593) 1,409 (615)

Net (loss) income attributable to Limoneira Company

Net income (loss) attributable to Limoneira Company $ 2,309 $ (990) $ (9,001) $ (2,868)

Non-GAAP Financial Measures

Due to significant depreciable assets associated with the nature of our operations and interest costs associated with our capital structure, management believes that earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, which excludes loss (gain) on stock in Calavo, LLCB earnings in equity investments, disposals of assets and impairments on real estate development assets when applicable, is an important measure to evaluate our results of operations between periods on a more comparable basis.

Due to significant depreciable assets associated with the nature of our operations and interest costs associated with our capital structure, management believes that earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, which excludes LLCB earnings in equity investments, loss on stock in Calavo, disposals of assets and impairments on real estate development assets when applicable, is an important measure to evaluate our results of operations between periods on a more comparable basis.

Such measurements are not prepared in accordance with U.S.

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EBITDA and adjusted EBITDA are summarized and reconciled to net loss attributable to Limoneira Company which management considers to be the most directly comparable financial measure calculated and presented in accordance with GAAP as follows (in thousands):

Three Months Ended April 30,

Six Months Ended April 30,

Net (loss) income attributable to Limoneira Company

Three Months Ended July 31, Nine Months Ended July 31,

2020 2019 2020 2019

Net income (loss) attributable to Limoneira Company $ 2,309 $ (990) $ (9,001) $ (2,868)

Interest expense, net 92 774 1,089 1,313

Income tax (benefit) provision

Income tax provision (benefit) 765 461 (5,876) (216)

Depreciation and amortization 2,557 2,080 7,555 6,327

Loss (gain) on stock in Calavo Growers, Inc.

LLCB loss (earnings) in equity investment

EBITDA $ 5,723 $ 2,325 $ (6,233) $ 4,556

Loss on stock in Calavo Growers, Inc.

— 1,775 6,299 2,073

LLCB earnings in equity investment, net (668) (303) (607) (2,573)

Loss on asset disposals 255 — 769 —

Adjusted EBITDA $ 5,310 $ 3,797 $ 228 $ 4,056

Three Months Ended April 30, 2020 Compared to the Three Months Ended April 30, 2019

Total net revenues for the second quarter of fiscal year 2020 were $39.6 million compared to $42.0 million for the same period of fiscal year 2019 .

The 6% decrease of $2.5 million was primarily the result of decreased agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended April 30,

Three Months Ended July 31, 2020 Compared to the Three Months Ended July 31, 2019

Total net revenues for the third quarter of fiscal year 2020 were $53.6 million compared to $50.9 million for the same period of fiscal year 2019.

The 5% increase of $2.7 million was primarily the result of increased agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended July 31,

2020 2019 Change

Lemons $ 43,234 $ 46,401 $ (3,167) (7)%

Avocados 6,133 2,519 3,614 143%

Oranges 2,232 711 1,521 214%

Specialty citrus and other crops 788 — 788 —

Agribusiness revenues $ 52,387 $ 49,631 $ 2,756 6%

The decrease in the second quarter of fiscal year 2020 was primarily the result of lower prices partially offset by increased volume of fresh lemons sold compared to the same period in fiscal year 2019 .

Second quarter of fiscal year 2020 includes sales of $2.3 million by Trapani Fresh on 143,000 cartons of fresh lemons sold.

During the second quarter of fiscal years 2020 and 2019 , fresh lemon sales were $25.3 million and $26.3 million on, in aggregate, 1,475,000 and 1,300,000 cartons of lemons sold at average per carton price of $17.14 and $20.26 , respectively.

COVID-19 related food service closures reduced the demand for lemons and created an over-supply in the marketplace.

This oversupply of lemons resulted in lower average per carton prices in the second quarter of fiscal year 2020 compared to the same period in fiscal year 2019.

Lemon revenues in the second quarter of fiscal years 2020 and 2019 included $3.9 million and $4.0 million shipping and handling, $1.6 million and $4.3 million lemon by-products and $1.9 million and $1.8 million other lemon sales, respectively.

Other lemon sales in the second quarter of fiscal years 2020 and 2019 included $0.9 million and $1.0 million in Chile, respectively.

The increase in the second quarter of fiscal year 2020 was primarily the result of an increase in price and volume of avocados sold compared to the same period in fiscal year 2019 .

During the second quarter of fiscal years 2020 and 2019 , 1.2 million and 0.4 million pounds of avocados were sold at an average per pound price of $1.64 and $1.27 , respectively.

The increase in the second quarter of fiscal year 2020 was primarily the result of higher prices of oranges partially offset by a decrease in volume of oranges sold compared to the same period in fiscal year 2019 .

In the second quarter of fiscal years 2020 and 2019 , 356,000 and 361,000 40-pound carton equivalents of oranges were sold at average per carton price of $7.49 and $5.52 , respectively.

The decrease in the third quarter of fiscal year 2020 was primarily the result of lower prices partially offset by increased volume of fresh lemons sold compared to the same period in fiscal year 2019.

During the third quarter of fiscal years 2020 and 2019, fresh lemon sales were $35.4 million and $35.8 million on, in aggregate, 1,979,000 and 1,876,000 cartons of lemons sold at average per carton prices of $17.91 and $19.09, respectively.

COVID-19 related food service closures reduced the demand for lemons in the food service marketplace and created an over-supply in the retail marketplace.

This oversupply of lemons resulted in lower average per carton prices in the third quarter of fiscal year 2020 compared to the same period in fiscal year 2019.

Lemon revenues in the third quarter of fiscal years 2020 and 2019 included $3.8 million and $5.2 million shipping and handling, $1.1 million and $3.6 million lemon by-products and $2.9 million and $1.8 million other lemon sales, respectively.

The increase in the third quarter of fiscal year 2020 was primarily the result of increased volume partially offset by lower prices of avocados sold compared to the same period in fiscal year 2019.

During the third quarter of fiscal years 2020 and 2019, we sold 6.1 million and 1.4 million pounds of avocados at an average per pound price of $1.00 and $1.80, respectively.

The increase in the third quarter of fiscal year 2020 was primarily the result of higher prices partially offset by decreased volume of oranges sold compared to the same period in fiscal year 2019.

In the third quarter of fiscal years 2020 and 2019, we sold 184,000 and 382,000 40-pound carton equivalents of oranges at an average per carton price of $12.13 and $1.86, respectively.

• Specialty citrus and other crops:

The decrease in the second quarter of fiscal year 2020 was primarily the result of a decrease in volume partially offset by higher prices of specialty citrus sold compared to the same period in fiscal year 2019 .

During the second quarter of fiscal years 2020 and 2019 , 125,000 and 272,000 40-pound carton equivalents of specialty citrus were sold at an average per carton price of $9.22 and $7.02 , respectively.

During the third quarter of fiscal year 2020, we sold 72,000 40-pound carton equivalents of specialty citrus at an average per carton price of $10.94.

There were no sales in the third quarter of fiscal year 2019.

Costs and Expenses

Our total costs and expenses in the second quarter of fiscal year 2020 were $42.4 million compared to $43.0 million in the same period of fiscal year 2019 .

The 1% decrease of $0.6 million was primarily attributable to decreases in our agribusiness costs and expenses.

Our total costs and expenses in the third quarter of fiscal year 2020 were $51.7 million compared to $48.8 million in the same period of fiscal year 2019.

The 6% increase of $3.0 million was primarily attributable to increases in our agribusiness costs partially offset by decreases in selling, general and administrative expenses.

Costs and expenses associated with our agribusiness include packing costs, harvest costs, growing costs, costs related to the fruit we procure and sell for third-party growers and depreciation and amortization expense, as detailed below ($ in thousands):

Agribusiness Costs and Expenses for the Three Months Ended April 30,

Agribusiness Costs and Expenses for the Three Months Ended July 31,

2020 2019 Change

Packing costs $ 16,993 $ 13,524 $ 3,469 26%

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Packing costs primarily consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs.

In the second quarter of fiscal years 2020 and 2019 , lemon packing costs were $10.4 million and $9.9 million , respectively, which include Trapani Fresh lemon packing costs of $0.6 million in the second quarter of fiscal year 2020 .

During the second quarter of fiscal years 2020 and 2019 , we packed and sold 1,475,000 and 1,300,000 cartons of lemons at average per carton costs of $7.06 and $7.60 , respectively.

Additionally, packing costs included $0.7 million and $0.8 million of shipping costs in the second quarter of fiscal years 2020 and 2019 , respectively.

In the third quarter of fiscal years 2020 and 2019, lemon packing costs excluding shipping costs were $15.9 million and $12.0 million, respectively.

During the third quarter of fiscal years 2020 and 2019, we packed and sold 1,979,000 and 1,876,000 cartons of lemons at average per carton costs of $8.05 and $6.41, respectively.

Additionally, packing costs included $1.1 million and $1.5 million of shipping costs in the third quarter of fiscal years 2020 and 2019, respectively.

• Harvest costs:

Harvest costs for the second quarter of fiscal year 2020 were similar to the second quarter of 2019 .

The increase in the third quarter of fiscal year 2020 was primarily the result of increased volume of avocados harvested compared to the same period in fiscal year 2019.

• Growing costs:

Growing costs, also referred to as cultural costs, consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation.

In the second quarter of fiscal year 2020 growing costs were similar to the same period in fiscal year 2019 .

In the third quarter of fiscal year 2020 growing costs were similar to the same period in fiscal year 2019.

Growing costs reflect farm management decisions based on weather, harvest timing and crop conditions.

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The cost of procuring fruit from other growers is referred to as third-party grower costs.

The decrease in the second quarter of fiscal year 2020 is primarily attributable to lower prices partially offset by increased volume of third-party grower fruit sold.

Of the 1,475,000 and 1,300,000 cartons of lemons packed and sold during the second quarter of fiscal years 2020 and 2019 , respectively, 882,000 ( 60% ) and 770,000 ( 59% ) cartons were procured from third-party growers at average per carton prices of $11.70 and $17.01 , respectively.

The decrease in the third quarter of fiscal year 2020 was primarily attributable to lower prices partially offset by increased volume of third-party grower fruit sold.

Of the 1,979,000 and 1,876,000 cartons of lemons packed and sold during the third quarter of fiscal years 2020 and 2019, respectively, 1,269,000 (64%) and 1,101,000 (59%) cartons were procured from third-party growers at average per carton prices of $8.78 and $11.65, respectively.

• Depreciation and amortization:

Depreciation and amortization expense for the second quarter of fiscal year 2020 was approximately $0.3 million higher than the same period of fiscal year 2019 , primarily due to the acquisition of Trapani Fresh in May 2019.

Selling, general and administrative costs and expenses were $5.3 million in the three months ended April 30, 2020 compared to $4.8 million in the three months ended April 30, 2019 .

The $0.5 million increase was primarily the result of $0.6 million due to the acquisition of Trapani Fresh, $0.1 million in training costs associated with an ERP implementation and $0.3 million of other selling and administrative expenses, partially offset by a net decrease in salaries, benefits and incentive compensation of $0.5 million as of April 30, 2020 compared to April 30, 2019 .

Depreciation and amortization expense for the third quarter of fiscal year 2020 was approximately $0.4 million higher than the same period of fiscal year 2019, primarily due to the acquisition of Trapani Fresh in May 2019 and increased assets placed into service.

Selling, general and administrative costs and expenses were $3.9 million in the three months ended July 31, 2020 compared to $5.0 million in the three months ended July 31, 2019.

The $1.1 million decrease was primarily the result of $0.9 million decrease in general and administrative expenses, including certain corporate overhead expenses and $0.2 million decrease in salaries, benefits and incentive compensation as of July 31, 2020 compared to July 31, 2019.

Other (Expense) Income

Other expense for the three months ended April 30, 2020 was comprised primarily of $4.3 million loss on stock in Calavo Growers, Inc., $0.4 million of equity in loss of investments, and $1.1 million of interest expense, net.

Other income for the three months ended April 30, 2019 was comprised primarily of $3.6 million gain on stock in Calavo Growers, Inc., and $1.9 million of equity in earnings of investments, partially offset by $0.7 million of interest expense, net.

We recorded an estimated income tax benefit of $3.5 million and a tax provision of $1.1 million in the second quarter of fiscal years 2020 and 2019 on pre-tax loss of $8.8 million and a pre-tax income of $3.9 million , respectively The tax benefit recorded for the second quarter of fiscal year 2020 differs from the U.S.

Other income for the three months ended July 31, 2020 was comprised primarily of $0.8 million of equity in earnings of investments partially offset by $0.1 million of interest expense, net.

Other expense for the three months ended July 31, 2019 was comprised primarily of $1.8 million loss on stock in Calavo Growers, Inc.

and $0.8 million of interest expense, net, partially offset by $0.5 million of equity in investments.

We recorded an estimated income tax provision of $0.8 million and $0.5 million in the third quarter of fiscal years 2020 and 2019 on pre-tax income of $2.6 million and $0.1 million, respectively.

The tax provision recorded for the third quarter of fiscal year 2020 differs from the U.S.

federal statutory tax rate of 21.0% due primarily to a $0.6 million discrete benefit related to the CARES Act.

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Net loss (income) attributable to noncontrolling interest represents 10% and 49% of the net loss (income) of PDA and Trapani Fresh, respectively.

Six Months Ended April 30, 2020 Compared to the Six Months Ended April 30, 2019

Total net revenues for the six months ended April 30, 2020 were $81.2 million compared to $84.1 million for the six months ended April 30, 2019 .

The 3% decrease of $2.8 million was primarily the result of decreased agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Six Months Ended April 30,

Nine Months Ended July 31, 2020 Compared to the Nine Months Ended July 31, 2019

Total net revenues were similar for the nine months ended July 31, 2020 at $134.8 million compared to $134.9 million for the nine months ended July 31, 2019, which was primarily the result of offsetting agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Nine Months Ended July31,

2020 2019 Change

Lemons $ 111,983 $ 121,379 $ (9,396) (8)%

Avocados 8,323 3,062 5,261 172%

Oranges 7,171 3,794 3,377 89%

Specialty citrus and other crops 3,832 3,019 813 27%

Agribusiness revenues $ 131,309 $ 131,254 $ 55 —%

The decrease in the first six months of fiscal year 2020 was primarily the result of lower prices partially offset by increased volume of fresh lemons sold compared to the same period in fiscal year 2019 .

Fiscal year 2020 includes sales of $2.5 million by Trapani Fresh on 196,000 cartons of fresh lemons sold.

During the first six months of fiscal years 2020 and 2019 , fresh lemon sales were $52.3 million and $57.2 million on, in aggregate, 2,755,000 and 2,572,000 cartons of lemons sold at average per carton prices of $18.99 and $22.26 , respectively.

COVID-19 related food service closures reduced the demand for lemons and created an over-supply in the marketplace.

This oversupply of lemons resulted in lower average per carton prices in the second quarter of fiscal year 2020 compared to the same period in fiscal year 2019.

Lemon revenues included $8.0 million and $8.1 million shipping and handling, $2.6 million and $6.3 million lemon by-products and $5.9 million and $3.3 million other lemon sales during the first six months of fiscal years 2020 and 2019 , respectively.

Other lemon sales in the first six months of fiscal years 2020 and 2019 included $1.3 million and $1.4 million in Chile, respectively.

The increase in the first six months of fiscal year 2020 was primarily the result of increased price and volume of avocados sold compared to the same period in fiscal year 2019 .

During the first six months of fiscal years 2020 and 2019 , 1.4 million and 0.4 million pounds of avocados were sold at an average per pound price of $1.61 and $1.27 , respectively.

The increase in the first six months of fiscal year 2020 was primarily the result of an increase in price and volume of oranges sold compared to the same period in fiscal year 2019 .

During the six months of fiscal years 2020 and 2019 , 551,000 and 486,000 40-pound carton equivalents of oranges were sold at average per carton prices of $8.75 and $6.04 , respectively.

Additionally, in the first six months of fiscal years 2020 and 2019 , revenues included $0.1 million and $0.2 million in Chile, respectively.

The decrease in the first nine months of fiscal year 2020 was primarily the result of lower prices partially offset by increased volume of fresh lemons sold compared to the same period in fiscal year 2019.

During the first nine months of fiscal years 2020 and 2019, fresh lemon sales were $87.8 million and $93.1 million on, in aggregate, 4,734,000 and 4,448,000 cartons of lemons sold at average per carton prices of $18.54 and $20.92, respectively.

COVID-19 related food service closures reduced the demand for lemons in the food service marketplace and created an over-supply in the retail marketplace.

This oversupply of lemons resulted in lower average per carton prices in the second and third quarters of fiscal year 2020 compared to the same periods in fiscal year 2019.

Lemon revenues included $11.8 million and $13.3 million shipping and handling, $3.7 million and $9.9 million lemon by-products and $8.8 million and $5.1 million other lemon sales during the first nine months of fiscal years 2020 and 2019, respectively.

The increase in the first nine months of fiscal year 2020 was primarily the result of increased volume partially offset by lower prices of avocados sold compared to the same period in fiscal year 2019.

During the first nine months of fiscal years 2020 and 2019, we sold 7.5 million and 1.8 million pounds of avocados at an average per pound price of $1.11 and $1.71, respectively.

The increase in the first nine months of fiscal year 2020 was primarily the result of higher prices partially offset by decreased volume of oranges sold compared to the same period in fiscal year 2019.

During the nine months of fiscal years 2020 and 2019, we sold 736,000 and 863,000 40-pound carton equivalents of oranges at average per carton prices of $9.74 and $4.40, respectively.

• Specialty citrus and other crops:

The decrease in the first six months of fiscal year 2020 was primarily the result of a decrease in volume partially offset by higher prices of specialty citrus sold compared to the same period in fiscal year 2019 .

During the first six months of fiscal years 2020 and 2019 , 256,000 and 353,000 40-pound carton equivalents of specialty citrus were sold at an average per carton price of $11.89 and $8.97 , respectively.

The increase in the first nine months of fiscal year 2020 was primarily the result of higher prices partially offset by decreased volume of specialty citrus sold compared to the same period in fiscal year 2019.

During the first nine months of fiscal years 2020 and 2019, we sold 328,000 and 358,000 40-pound carton equivalents of specialty citrus at an average per carton price of $11.68 and $8.43, respectively.

Costs and Expenses

Our total costs and expenses in the first six months of fiscal year 2020 were $92.5 million compared to $88.1 million in the same period of fiscal year 2019 .

Our total costs and expenses in the first nine months of fiscal year 2020 were $144.3 million compared to $136.8 million in the same period of fiscal year 2019.

The 5% increase of $7.4 million was primarily attributable to increases in our agribusiness and selling, general and administrative costs and expenses.

Agribusiness Costs and Expenses for the Six Months Ended April 30,

Costs and expenses associated with our agribusiness include packing costs, harvest

costs, growing costs, costs related to the fruit we procure and sell for third-party growers and depreciation and amortization expense, as detailed below ($ in thousands):

Agribusiness Costs and Expenses for the Nine Months Ended July 31,

2020 2019 Change

Packing costs $ 37,279 $ 32,972 $ 4,307 13%

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Packing costs primarily consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs.

Lemon packing costs were $19.0 million and $18.2 million in the first six months of fiscal years 2020 and 2019 , respectively, which include Trapani Fresh lemon packing costs of $0.6 million during the first six months of fiscal year 2020 .

During the first six months of fiscal years 2020 and 2019 , we packed and sold 2,755,000 and 2,572,000 cartons of lemons at average per carton costs of $6.89 and $7.06 , respectively.

Additionally, packing costs included $1.3 million of shipping costs in the first six months of fiscal years 2020 and 2019 .

Lemon packing costs excluding shipping costs were $34.9 million and $30.2 million in the first nine months of fiscal years 2020 and 2019, respectively.

During the first nine months of fiscal years 2020 and 2019, we packed and sold 4,734,000 and 4,448,000 cartons of lemons at average per carton costs of $7.38 and $6.78, respectively.

Additionally, packing costs included $2.4 million and $2.8 million of shipping costs in the first nine months of fiscal years 2020 and 2019.

• Harvest costs:

The increase in the first six months of fiscal year 2020 was primarily attributable to increased volume of lemons and avocados harvested.

The increase in the first nine months of fiscal year 2020 was primarily the result of increased volume of lemons and avocados harvested compared to the same period in fiscal year 2019.

• Growing costs:

Growing costs, also referred to as cultural costs, consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation.

The increase in the first six months of fiscal year 2020 was primarily due to net increased cost for cultivation and Argentina growing costs, partially offset by pest control, pruning and Chile growing costs compared to the same period in fiscal year 2019 .

The increase in the first nine months of fiscal year 2020 compared to the same period in fiscal year 2019 was primarily due to an increase in cultivation costs.

Growing costs reflect farm management decisions based on weather, harvest timing and crop conditions.

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The cost of procuring fruit from other growers is referred to as third-party grower costs.

The decrease in the first six months of fiscal year 2020 is primarily attributable to lower prices, partially offset by increased volume of third-party grower fruit sold.

Of the 2,755,000 and 2,572,000 cartons of lemons packed and sold during the first six months of fiscal years 2020 and 2019 , respectively, 1,587,000 ( 58% ) and 1,527,000 ( 59% ) cartons were procured from third-party growers at average per carton prices of $13.87 and $18.92 , respectively.

The decrease in the first nine months of fiscal year 2020 is primarily attributable to lower prices partially offset by increased volume of third-party grower fruit sold.

Of the 4,734,000 and 4,448,000 cartons of lemons packed and sold during the first nine months of fiscal years 2020 and 2019, respectively, 2,856,000 (60%) and 2,628,000 (59%) cartons were procured from third-party growers at average per carton prices of $11.61 and $15.87, respectively.

• Depreciation and amortization:

Depreciation and amortization expense for the first six months of fiscal year 2020 was approximately $0.7 million higher than the same period of fiscal year 2019 , primarily due to the acquisition of Trapani Fresh in May 2019.

Selling, general and administrative costs and expenses were $11.6 million in the six months ended April 30, 2020 compared to $9.9 million in the six months ended April 30, 2019 .

The $1.8 million increase was primarily the result of a $0.8 million increase due to the acquisition of Trapani Fresh, $0.5 million increase in training costs associated with an ERP implementation, and $0.5 million of other selling and administrative expenses, including certain corporate overhead expenses as of April 30, 2020 compared to April 30, 2019 .

Depreciation and amortization expense for the first nine months of fiscal year 2020 was approximately $1.2 million higher than the same period of fiscal year 2019, primarily due to the acquisition of Trapani Fresh in May 2019.

Selling, general and administrative costs and expenses were $15.6 million in the nine months ended July 31, 2020 compared to $14.8 million in the nine months ended July 31, 2019.

The $0.7 million increase was primarily the result of $0.5 million increase in training costs associated with an ERP implementation and $0.4 million increase of other selling, general and administrative expenses, including certain corporate overhead expenses, partially offset by $0.2 million decrease in salaries, benefits and incentive compensation.

Other (Expense) Income

Other expense for the six months ended April 30, 2020 was comprised primarily of $6.3 million loss on stock in Calavo Growers, Inc., $0.5 million of equity in loss of investments, and $1.0 million of interest expense, net.

Other income for the six months ended April 30, 2019 was comprised primarily of $2.0 million of equity in earnings of investments partially offset by $0.5 million of interest expense, net.

We recorded an estimated income tax benefit of $6.6 million and $0.7 million in the first six months of fiscal years 2020 and 2019 on pre-tax loss of $18.9 million and $2.5 million , respectively.

The tax benefit recorded for the first six months of fiscal year 2020 differs from the U.S.

Other expense for the nine months ended July 31, 2020 was comprised primarily of $6.3 million loss on stock in Calavo Growers, Inc.

and $1.1 million of interest expense, net, partially offset by $0.3 million of equity in earnings of investments.

Other expense for the nine months ended July 31, 2019 was comprised primarily of $2.1 million loss on stock in Calavo Growers, Inc.

and $1.3 million of interest expense, net, partially offset by $2.4 million of equity in earnings of investments.

We recorded an estimated income tax benefit of $5.9 million and $0.2 million in the first nine months of fiscal years 2020 and 2019 on pre-tax loss of $16.3 million and $2.5 million, respectively.

The tax benefit recorded for the first nine months of fiscal year 2020 differs from the U.S.

federal statutory tax rate of 21.0% due primarily to a $2.0 million discrete benefit related to the CARES Act.

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See Note 20 - Segment Information of the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our operating segments.

Three Months Ended April 30, 2020 Compared to the Three Months Ended April 30, 2019

The following table shows the segment results of operations for the three months ended April 30, 2020 (in thousands):

Three Months Ended July 31, 2020 Compared to the Three Months Ended July 31, 2019

The following table shows the segment results of operations for the three months ended July 31, 2020 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 39,459 $ 3,775 $ — $ 6,133 $ 3,020 $ 52,387 $ 1,172 $ 53,559

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Depreciation and amortization — — — — — 2,271 286 2,557

Operating income (loss)

The following table shows the segment results of operations for the three months ended April 30, 2019 (in thousands):

Operating (loss) income $ (235) $ 4,117 $ — $ 3,596 $ 354 $ 5,561 $ (3,747) $ 1,814

The following table shows the segment results of operations for the three months ended July 31, 2019 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 41,169 $ 5,232 $ — $ 2,519 $ 711 $ 49,631 $ 1,238 $ 50,869

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The following analysis should be read in conjunction with the previous section “Results of Operations.”

For the second quarter of fiscal years 2020 and 2019 , our fresh lemons segment total net revenues were $28.7 million and $32.4 million , respectively.

For the third quarter of fiscal years 2020 and 2019, our fresh lemons segment total net revenues were $39.5 million and $41.2 million, respectively.

The 4% decrease of $1.7 million was primarily due to decreases in fresh lemon carton sales of $0.4 million and lemon by-products of $2.5 million, partially offset by an increase in brokerage and other sales of $1.1 million.

Costs and expenses associated with our fresh lemons segment include harvest costs, growing costs and costs of fruit we procure from third-party growers.

For the second quarter of fiscal years 2020 and 2019 , our fresh lemons segment costs and expenses were $27.0 million and $27.9 million , respectively.

The 3% decrease of $1.0 million primarily consisted of the following:

Harvest costs for the second quarter of fiscal year 2020 were $0.2 million higher than the same period of fiscal year 2019 .

Growing costs for the second quarter of fiscal year 2020 were $0.3 million higher than the same period of fiscal year 2019 .

Third-party grower costs for the second quarter of fiscal year 2020 were $2.5 million lower than the same period of fiscal year 2019 .

Transportation costs for the second quarter of fiscal year 2020 were $0.7 million higher than the same period of fiscal year 2019 .

Intersegment costs and expenses for the second quarter of fiscal year 2020 were $0.3 million higher than the same period of fiscal year 2019 .

For the third quarter of fiscal years 2020 and 2019, our fresh lemons segment costs and expenses were $39.7 million and $35.7 million, respectively.

The 11% increase of $4.0 million primarily consisted of the following:

• Harvest costs for the third quarter of fiscal year 2020 were $0.3 million lower than the same period of fiscal year 2019.

• Growing costs for the third quarter of fiscal year 2020 were $2.3 million lower than the same period of fiscal year 2019.

• Third-party grower costs for the third quarter of fiscal year 2020 were $0.5 million lower than the same period of fiscal year 2019.

• Transportation costs for the third quarter of fiscal year 2020 were $1.1 million higher than the same period of fiscal year 2019.

• Intersegment costs and expenses for the third quarter of fiscal year 2020 were $6.1 million higher than the same period of fiscal year 2019.

Lemon Packing

Lemon packing segment revenue is comprised of intersegment packing revenue and shipping and handling revenue.

For the second quarter of fiscal years 2020 and 2019 , our lemon packing segment total net revenues were $12.3 million and $12.1 million , respectively.

For the third quarter of fiscal years 2020 and 2019, our lemon packing segment total net revenues were $20.1 million and $15.5 million, respectively.

Costs and expenses associated with our lemon packing segment consist of the cost to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs.

For the second quarter of fiscal years 2020 and 2019 , our lemon packing costs and expenses were $10.3 million and $10.7 million , respectively.

For the second quarter of fiscal years 2020 and 2019 , lemon packing segment operating income per carton sold was $1.41 and $1.11 , respectively.

In the second quarter of fiscal years 2020 and 2019 , the lemon packing segment included $8.5 million and $8.2 million , respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

For the third quarter of fiscal years 2020 and 2019, our lemon packing costs and expenses were $16.0 million and $13.5 million, respectively.

For the third quarter of fiscal years 2020 and 2019, lemon packing segment operating income per carton sold was $2.08 and $1.05, respectively.

In the third quarter of fiscal years 2020 and 2019, the lemon packing segment included $16.3 million and $10.3 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

Such intersegment revenues and expenses are eliminated in our consolidated financial statements.

For the second quarter of fiscal years 2020 and 2019 , our avocados segment had total net revenues of $2.0 million and $0.5 million , respectively.

For the third quarter of fiscal years 2020 and 2019, our avocados segment had total net revenues of $6.1 million and $2.5 million, respectively.

Costs and expenses associated with our avocados segment include harvest and growing costs.

For the second quarter of fiscal years 2020 and 2019 , our avocados segment costs and expenses were $1.6 million and $0.9 million , respectively.

For the third quarter of fiscal years 2020 and 2019, our avocados segment costs and expenses were $2.5 million and $1.2 million, respectively.

The 114% increase of $1.4 million primarily consisted of the following:

Harvest costs for the second quarter of fiscal year 2020 were $0.2 million higher than the same period of fiscal year 2019 .

Growing costs for the second quarter of fiscal year 2020 were $0.5 million higher than the same period of fiscal year 2019 .

• Harvest costs for the third quarter of fiscal year 2020 were $0.6 million higher than the same period of fiscal year 2019.

• Growing costs for the third quarter of fiscal year 2020 were $0.7 million higher than the same period of fiscal year 2019.

Other Agribusiness

For the second quarter of fiscal years 2020 and 2019 , our other agribusiness segment total net revenues were $3.8 million and $3.9 million , respectively.

The 2% decrease of $0.1 million primarily consisted of the following:

Orange revenues for the second quarter of fiscal year 2020 were $0.7 million higher than the same period of fiscal year 2019 .

Specialty citrus and other crops revenues for the second quarter of fiscal year 2020 were $0.8 million lower than the same period of fiscal year 2019 .

For the third quarter of fiscal years 2020 and 2019, our other agribusiness segment total net revenues were $3.0 million and $0.7 million, respectively.

The 325% increase of $2.3 million primarily consisted of the following:

• Orange revenues for the third quarter of fiscal year 2020 were $1.5 million higher than the same period of fiscal year 2019.

• Specialty citrus and other crops revenues for the third quarter of fiscal year 2020 were $0.8 million higher than the same period of fiscal year 2019.

Costs and expenses associated with our other agribusiness segment include harvest costs, growing costs and purchased fruit costs.

For the second quarter of fiscal years 2020 and 2019 , our other agribusiness costs and expenses were $3.4 million and $3.9 million , respectively.

The 12% decrease of $0.5 million primarily consisted of the following:

Harvest costs for the second quarter of fiscal year 2020 were $0.4 million lower than the same period of fiscal year 2019 .

Growing costs for the second quarter of fiscal year 2020 were $0.7 million lower than the same period of fiscal year 2019 .

Purchased fruit costs for the second quarter of fiscal year 2020 were $0.6 million higher than the same period of fiscal year 2019 .

Total agribusiness depreciation and amortization expenses for the second quarter of fiscal year 2020 were $0.3 million higher than the same period of fiscal year 2019 .

For the third quarter of fiscal years 2020 and 2019, our other agribusiness costs and expenses were $2.7 million and $0.8 million, respectively.

The 223% increase of $1.8 million primarily consisted of the following:

• Harvest costs for the third quarter of fiscal year 2020 were $0.1 million higher than the same period of fiscal year 2019.

• Growing costs for the third quarter of fiscal year 2020 were $1.3 million higher than the same period of fiscal year 2019.

• Purchased fruit costs for the third quarter of fiscal year 2020 were $0.4 million higher than the same period of fiscal year 2019.

Total agribusiness depreciation and amortization expenses for the third quarter of fiscal year 2020 were $0.4 million higher than the same period of fiscal year 2019.

Corporate and Other

Our rental operations had total net revenues of approximately $1.1 million for the second quarter of fiscal years 2020 and 2019 .

Costs and expenses in rental operations and real estate development for the second quarter of fiscal years 2020 and 2019 were $1.1 million .

Depreciation and amortization expenses for the second quarter of fiscal years 2020 and 2019 were similar at approximately $0.3 million .

Our rental operations had total net revenues of approximately $1.2 million for the third quarter of fiscal years 2020 and 2019.

Costs and expenses in rental operations and real estate development for the third quarter of fiscal years 2020 and 2019 were similar at approximately $1.0 million.

Depreciation and amortization expenses for the third quarter of fiscal years 2020 and 2019 were similar at approximately $0.3 million.

Selling, general and administrative costs and expenses include other costs not allocated to the operating segments.

Selling, general and administrative costs and expenses for the second quarter of fiscal year 2020 were $0.5 million higher than the same period of fiscal year 2019 .

Six Months Ended April 30, 2020 Compared to the Six Months Ended April 30, 2019

The following table shows the segment results of operations for the six months ended April 30, 2020 (in thousands):

Selling, general and administrative costs and expenses for the third quarter of fiscal year 2020 were $1.1 million lower than the same period of fiscal year 2019.

Nine Months Ended July 31, 2020 Compared to the Nine Months Ended July 31, 2019

The following table shows the segment results of operations for the nine months ended July 31, 2020 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 100,231 $ 11,752 $ — $ 8,323 $ 11,003 $ 131,309 $ 3,477 $ 134,786

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Depreciation and amortization — — — — — 6,715 840 7,555

Operating income (loss)

The following table shows the segment results of operations for the six months ended April 30, 2019 (in thousands):

Operating (loss) income $ (775) $ 8,716 $ — $ 3,752 $ 1,013 $ 5,991 $ (15,476) $ (9,485)

The following table shows the segment results of operations for the nine months ended July 31, 2019 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 108,090 $ 13,289 $ — $ 3,062 $ 6,813 $ 131,254 $ 3,668 $ 134,922

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The following analysis should be read in conjunction with the previous section “Results of Operations.”

For the first six months of fiscal years 2020 and 2019 , our fresh lemons segment total net revenues were $60.8 million and $66.9 million , respectively.

For the first nine months of fiscal years 2020 and 2019, our fresh lemons segment total net revenues were $100.2 million and $108.1 million, respectively.

The 7% decrease of $7.9 million was primarily due to decreases in fresh lemon carton sales of $5.3 million and lemon by-products of $6.3 million, partially offset by an increase in brokerage and other sales of $3.7 million.

Costs and expenses associated with our fresh lemons segment include harvest costs, growing costs and costs of fruit we procure from third-party growers.

For the first six months of fiscal years 2020 and 2019 , our fresh lemons segment costs and expenses were $61.3 million and $60.0 million , respectively.

For the first nine months of fiscal years 2020 and 2019, our fresh lemons segment costs and expenses were $101.0 million and $95.7 million, respectively.

The 6% increase of $5.4 million primarily consisted of the following:

Harvest costs for the first six months of fiscal year 2020 were $1.5 million higher than the same period of fiscal year 2019

Growing costs for the first six months of fiscal year 2020 were $2.6 million higher than the same period of fiscal year 2019 .

Third-party grower costs for the first six months of fiscal year 2020 were $4.4 million lower than the same period of fiscal year 2019 .

Transportation costs for the first six months of fiscal year 2020 were $1.3 million higher than the same period of fiscal year 2019 .

Intersegment costs and expenses for the first six months of fiscal year 2020 were $0.4 million higher than the same period of fiscal year 2019 .

• Harvest costs for the first nine months of fiscal year 2020 were $1.1 million higher than the same period of fiscal year 2019

• Growing costs for the first nine months of fiscal year 2020 were $0.3 million higher than the same period of fiscal year 2019.

• Third-party grower costs for the first nine months of fiscal year 2020 were $4.9 million lower than the same period of fiscal year 2019.

• Transportation costs for the first nine months of fiscal year 2020 were $2.4 million higher than the same period of fiscal year 2019.

• Intersegment costs and expenses for the first nine months of fiscal year 2020 were $6.4 million higher than the same period of fiscal year 2019.

Lemon Packing

Lemon packing segment revenue is comprised of intersegment packing revenue and shipping and handling revenue.

For the first six months of fiscal years 2020 and 2019 , our lemon packing segment total net revenues were $23.5 million and $23.3 million , respectively.

For the first nine months of fiscal years 2020 and 2019, our lemon packing segment total net revenues were $43.6 million and $38.8 million, respectively.

For the first six months of fiscal years 2020 and 2019 , our lemon packing costs and expenses were $18.9 million and $19.4 million , respectively.

For the first six months of fiscal years 2020 and 2019 , lemon packing segment operating income per carton sold was $1.67 and $1.48 , respectively.

In the first six months of fiscal years 2020 and 2019 , the lemon packing segment included $15.6 million and $15.2 million , respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

For the first nine months of fiscal years 2020 and 2019, our lemon packing costs and expenses were $34.9 million and $33.0 million, respectively.

For the first nine months of fiscal years 2020 and 2019, lemon packing segment operating income per carton sold was $1.84 and $1.30, respectively.

In the first nine months of fiscal years 2020 and 2019, the lemon packing segment included $31.9 million and $25.5 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

Such intersegment revenues and expenses are eliminated in our consolidated financial statements.

For the first six months of fiscal years 2020 and 2019 , our avocados segment had total net revenues of $2.2 million and $0.5 million , respectively.

For the first nine months of fiscal years 2020 and 2019, our avocados segment had total net revenues of $8.3 million and $3.1 million, respectively.

Costs and expenses associated with our avocados segment include harvest and growing costs.

For the first six months of fiscal years 2020 and 2019 , our avocados segment costs and expenses were $2.0 million and $1.6 million , respectively.

For the first nine months of fiscal years 2020 and 2019, our avocados segment costs and expenses were $4.6 million and $2.8 million, respectively.

The 62% increase of $1.7 million primarily consisted of the following:

Harvest costs for the first six months of fiscal year 2020 were $0.2 million higher than the same period of fiscal year 2019 .

Growing costs for the first six months of fiscal year 2020 were $0.2 million higher than the same period of fiscal year 2019 .

• Harvest costs for the first nine months of fiscal year 2020 were $0.8 million higher than the same period of fiscal year 2019.

• Growing costs for the first nine months of fiscal year 2020 were $1.0 million higher than the same period of fiscal year 2019.

Other Agribusiness

For the first six months of fiscal years 2020 and 2019 , our other agribusiness segment total net revenues were $8.0 million and $6.1 million , respectively.

For the first nine months of fiscal years 2020 and 2019, our other agribusiness segment total net revenues were $11.0 million and $6.8 million, respectively.

The 62% increase of $4.2 million primarily consisted of the following:

Orange revenues for the first six months of fiscal year 2020 were $2.0 million higher than the same period of fiscal year 2019 .

Specialty citrus and other crops revenues for the first six months of fiscal year 2020 were $0.1 million lower than the same period of fiscal year 2019 .

• Orange revenues for the first nine months of fiscal year 2020 were $3.4 million higher than the same period of fiscal year 2019.

• Specialty citrus and other crops revenues for the first nine months of fiscal year 2020 were $0.8 million higher than the same period of fiscal year 2019.

Costs and expenses associated with our other agribusiness segment include harvest costs, growing costs and purchased fruit costs.

For the first six months of fiscal years 2020 and 2019 , our other agribusiness costs and expenses were $7.3 million and $6.4 million , respectively.

For the first nine months of fiscal years 2020 and 2019, our other agribusiness costs and expenses were $10.0 million and $7.2 million, respectively.

The 39% increase of $2.8 million primarily consisted of the following:

Harvest costs for the first six months of fiscal year 2020 were similar to the same period of fiscal year 2019 .

Growing costs for the first six months of fiscal year 2020 were $0.5 million lower than the same period of fiscal year 2019 .

Purchased fruit costs for the first six months of fiscal year 2020 were $1.4 million higher than the same period of fiscal year 2019 .

Total agribusiness depreciation and amortization expenses for the first six months of fiscal year 2020 were $0.7 million higher than the same period of fiscal year 2019 .

• Harvest costs for the first nine months of fiscal year 2020 were $0.1 million higher than the same period of fiscal year 2019.

• Growing costs for the first nine months of fiscal year 2020 were $0.9 million higher than the same period of fiscal year 2019.

• Purchased fruit costs for the first nine months of fiscal year 2020 were $1.8 million higher than the same period of fiscal year 2019.

Total agribusiness depreciation and amortization expenses for the first nine months of fiscal year 2020 were $1.2 million higher than the same period of fiscal year 2019.

Corporate and Other

Our rental operations had total net revenues of approximately $2.3 million for the first six months of fiscal years 2020 and 2019 .

Costs and expenses in rental operations and real estate development for the first six months of fiscal years 2020 and 2019 were $2.4 million and $2.2 million , respectively.

Depreciation and amortization expenses for the first six months of fiscal years 2020 and 2019 were similar at approximately $0.6 million .

Our rental operations had total net revenues of approximately $3.5 million and $3.7 million for the first nine months of fiscal years 2020 and 2019, respectively.

Costs and expenses in rental operations and real estate development for the first nine months of fiscal years 2020 and 2019 were $3.4 million and $3.3 million, respectively.

Depreciation and amortization expenses for the first nine months of fiscal years 2020 and 2019 were similar at approximately $0.8 million.

Selling, general and administrative costs and expenses include other costs not allocated to the operating segments.

Selling, general and administrative costs and expenses for the first six months of fiscal year 2020 were $1.8 million higher than the same period of fiscal year 2019 .

Selling, general and administrative costs and expenses for the first nine months of fiscal year 2020 were $0.7 million higher than the same period of fiscal year 2019.

Seasonal Operations

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Due to this seasonality and to avoid the inference that interim results are indicative of the estimated results for a full fiscal year, we present supplemental information for 12-month periods ended at the interim date for the current and preceding years.

Results of Operations for the Trailing Twelve Months Ended April 30, 2020 and 2019

Results of Operations for the Trailing Twelve Months Ended July 31, 2020 and 2019

The following table shows the unaudited results of operations (in thousands):

Trailing Twelve Months Ended April 30,

Trailing Twelve Months Ended July 31,

Agribusiness $ 166,604 $ 144,723

Other operations 4,658 4,913

Total revenues 171,262 149,636

Costs and expenses:

Agribusiness 158,949 135,881

Other operations 4,566 4,342

6 unchanged sentences

Interest expense, net (1,910) (1,381)

Equity in earnings of investments

Equity in earnings of investments, net 965 2,992

(Loss) gain on stock in Calavo Growers, Inc.

(6,343) 2,150

Other income, net — 405

Total other (expense) income (7,288) 4,166

(Loss) income before income tax benefit (provision)

Income tax benefit (provision)

Net (loss) income

Loss before income tax benefit (20,380) (7,322)

Income tax benefit 6,757 1,852

Net loss (13,623) (5,470)

Loss (income) attributable to noncontrolling interest 1,547 (635)

Net (loss) income attributable to Limoneira Company

Net loss attributable to Limoneira Company $ (12,076) $ (6,105)

The following analysis should be read in conjunction with the previous section “Results of Operations.”

Total revenues increased $29.9 million in the twelve months ended April 30, 2020 compared to the twelve months ended April 30, 2019 primarily due to increased agribusiness revenues, particularly increased lemon sales.

Total costs and expenses increased $40.5 million in the twelve months ended April 30, 2020 compared to the twelve months ended April 30, 2019 primarily due to increases in our agribusiness and selling, general and administrative expenses.

• Total revenues increased $21.6 million in the twelve months ended July 31, 2020 compared to the twelve months ended July 31, 2019 primarily due to increased agribusiness revenues, particularly increased lemon, avocado and orange sales.

• Total costs and expenses increased $23.2 million in the twelve months ended July 31, 2020 compared to the twelve months ended July 31, 2019 primarily due to increases in our agribusiness costs and selling, general and administrative expenses.

The increase in agribusiness costs is associated with increased agribusiness production and the increase in selling, general and administrative expenses is primarily attributable to increased administrative personnel, salaries and benefits, and certain corporate expenses associated with our strategic initiatives.

Total other expense increased $16.2 million in the twelve months ended April 30, 2020 compared to the twelve months ended April 30, 2019 primarily due to increased losses on stock in Calavo, decreased equity in earnings of investments and an increase in interest expense.

Income tax benefit increased $7.9 million in the twelve months ended April 30, 2020 compared to the twelve months ended April 30, 2019 primarily due to a decrease in income before taxes as a result of decreased operating income, increased total other expense and discrete items related to the CARES Act.

• Total other expense increased $11.5 million in the twelve months ended July 31, 2020 compared to the twelve months ended July 31, 2019 primarily due to increased losses on stock in Calavo, decreased equity in earnings of investments and an increase in interest expense, net.

• Income tax benefit increased $4.9 million in the twelve months ended July 31, 2020 compared to the twelve months ended July 31, 2019 primarily due to a decrease in income before taxes as a result of decreased operating income and increased total other expense plus discrete items related to the CARES Act.

Liquidity and Capital Resources

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Cash Flows from Operating Activities

For the six months ended April 30, 2020 , net cash used in operating activities was $15.8 million compared to net cash provided by operating activities of $4.0 million for the six months ended April 30, 2019 .

For the nine months ended July 31, 2020, net cash used in operating activities was $11.4 million compared to net cash provided by operating activities of $4.3 million for the nine months ended July 31, 2019.

The significant components of our cash flows used in operating activities were as follows:

Net loss for the six months ended April 30, 2020 was $12.2 million compared to net loss of $1.9 million for the six months ended April 30, 2019 .

The components of net loss in the six months ended April 30, 2020 compared to the same period in fiscal year 2019 consist of a decrease in operating income of $7.3 million , an increase in total other (expense) income of $9.0 million and an increase in income tax benefit of $6.0 million .

The adjustments to reconcile net loss to net cash used in operating activities provided $6.6 million of cash in the six months ended April 30, 2020 compared to providing $3.4 million of cash in the same period in fiscal year 2019 primarily due to significant changes in depreciation and amortization, deferred taxes, loss on stock in Calavo and equity in loss (earnings) of investments.

The changes in operating assets and liabilities used $10.4 million of operating cash in the six months ended April 30, 2020 compared to providing $2.5 million of operating cash in the same period in fiscal year 2019 primarily due to significant changes in accounts receivable, prepaid expenses and other current assets, accounts payable and growers payable.

• Net loss for the nine months ended July 31, 2020 was $10.4 million compared to net loss of $2.3 million for the nine months ended July 31, 2019.

The components of net loss in the nine months ended July 31, 2020 compared to the same period in fiscal year 2019 consist of a decrease in operating income of $7.6 million, an increase in total other expense of $6.2 million and an increase in income tax benefit of $5.7 million.

• The adjustments to reconcile net loss to net cash (used in) provided by operating activities provided $15.4 million of cash in the nine months ended July 31, 2020 compared to providing $7.5 million of cash in the same period in fiscal year 2019, primarily due to significant changes in depreciation and amortization, loss on stock in Calavo and equity in earnings of investments.

• The changes in operating assets and liabilities used $16.4 million of operating cash in the nine months ended July 31, 2020 compared to using $0.9 million of operating cash in the same period in fiscal year 2019, primarily due to significant changes in accounts receivable, income tax receivable and accounts payable and growers payable.

Cash Flows from Investing Activities

For the six months ended April 30, 2020 , net cash provided by investing activities was $1.2 million compared to net cash used in investing activities of $16.4 million during the same period in fiscal year 2019 .

Net cash provided by investing activities for the six months ended April 30, 2020 was primarily comprised of proceeds from sale of stock in Calavo, offset by capital expenditures and investments.

Capital expenditures were $5.4 million in the six months ended April 30, 2020 , comprised of $5.3 million for property, plant and equipment primarily related to orchard and vineyard development and $0.1 million for real estate development projects.

Additionally, in the six months ended April 30, 2020 , we received proceeds from sale of stock in Calavo of $11.0 million , contributed $2.8 million to the Joint Venture for the development of our East Area I real estate development project and loaned $1.8 million to the Joint Venture.

Capital expenditures were $8.2 million in the six months ended April 30, 2019 , comprised of $7.9 million for property, plant and equipment primarily related to orchard and vineyard development and the purchase of a photovoltaic solar array and $0.3 million for real estate development projects.

Additionally, in the six months ended April 30, 2019 , we purchased an agriculture property for $0.4 million, contributed $4.0 million to the Joint Venture for the development of our East Area I real estate development project and paid $4.0 million to FGF towards the joint venture formation in Argentina.

For the nine months ended July 31, 2020, net cash provided by investing activities was $0.3 million compared to net cash used in investing activities of $31.4 million during the same period in fiscal year 2019.

Net cash provided by investing activities for the nine months ended July 31, 2020 was primarily comprised of proceeds from sale of stock in Calavo, offset by capital expenditures and investments.

Capital expenditures were $8.2 million in the nine months ended July 31, 2020, comprised of $7.9 million for property, plant and equipment primarily related to orchard and vineyard development and $0.3 million for real estate development projects.

Additionally, in the nine months ended July 31, 2020, we received proceeds from sale of stock in Calavo of $11.0 million, and contributed $2.8 million to the Joint Venture for the development of our East Area I real estate development project.

Capital expenditures were $12.6 million in the nine months ended July 31, 2019, comprised of $12.0 million for property, plant and equipment primarily related to orchard and vineyard development and the purchase of a photovoltaic solar array and $0.6 million for real estate development projects.

Additionally, in the nine months ended July 31, 2019, we purchased an agriculture property for $0.4 million, contributed $4.0 million to the Joint Venture for the development of our East Area I real estate development project and paid $15.0 million for the Trapani Fresh joint venture formation in Argentina.

Additionally, we sold 10,000 shares of Calavo stock for net proceeds of $1.0 million.

Cash Flows from Financing Activities

For the six months ended April 30, 2020 and 2019 , net cash provided by financing activities was $15.4 million and $13.3 million , respectively.

The $15.4 million of cash provided by financing activities during the six months ended April 30, 2020 was primarily comprised of net borrowings of long-term debt in the amount $18.5 million partially offset by common and preferred dividends, in aggregate, of $2.9 million .

The $13.3 million of cash provided by financing activities during the six months ended April 30, 2019 was primarily comprised

of net borrowings of long-term debt in the amount $16.5 million partially offset by common and preferred dividends, in aggregate, of $2.9 million.

For the nine months ended July 31, 2020 and 2019, net cash financing activities was $11.5 million and $27.5 million, respectively.

The $11.5 million of cash provided by financing activities during the nine months ended July 31, 2020 was primarily comprised of net borrowings of long-term debt in the amount $16.7 million partially offset by common and preferred dividends, in aggregate, of $4.4 million and purchases of shares of our common stock of $0.6 million under our share repurchase program.

The $27.5 million of

cash provided by financing activities during the nine months ended July 31, 2019 was primarily comprised of net borrowings of long-term debt in the amount $32.2 million partially offset by common and preferred dividends, in aggregate, of $4.4 million.

Transactions Affecting Liquidity and Capital Resources

In June 2017, we entered into a Master Loan Agreement (the “Loan Agreement”) with Farm Credit West, FLCA ("Farm Credit West") which includes a Revolving Credit Supplement and a Non-Revolving Credit Supplement (the “Supplements”).

In January 2018, we amended the Revolving Credit Supplement to increase the borrowing capacity from $60.0 million to $75.0 million .

Our Company and Farm Credit West, FLCA (“Farm Credit West”) are parties to that certain Master Loan Agreement (the “Loan Agreement”), dated June 20, 2017, which includes a Revolving Credit Supplement and a Non-Revolving Credit Supplement (together, the “Supplements”).

On June 30, 2020, we entered into a Conversion Agreement with Farm Credit West to convert term loans to fixed interest rates effective July 1, 2020.

No changes were made to the outstanding principal balances on the term loans and no cash repayments of principal were made by us.

The rates are subject to a prepayment restriction period for a portion of the fixed rate term that will expire on January 1, 2021, after which we may prepay any amounts without penalty.

The loan matures in 2043 and features a 3-year draw period followed by 20 years of fully amortized loan payments.

The RELOC matures in 2043 and features a 3-year draw period followed by 20 years of fully amortized loan payments.

The interest rate is variable with monthly interest-only payments during the 3-year draw period and monthly principal and interest payments thereafter.

The Supplements and RELOC provide aggregate borrowing capacity of $130.0 million comprised of $75.0 million under the Revolving Credit Supplement, $40.0 million under the Non-Revolving Credit Supplement and $15.0 million under the RELOC.

The borrowing capacity based on collateral value was $130.0 million at April 30, 2020 .

The borrowing capacity based on collateral value was $130.0 million at July 31, 2020.

The interest rate for any amount outstanding under the Supplements is based on the one-month London Interbank Offered Rate (“LIBOR”) rate plus an applicable margin, which is subject to adjustment on a monthly basis.

The applicable margin ranges from 1.60% to 2.35% depending on the ratio of current assets plus the remaining available commitment divided by current liabilities.

On July 1, 2019, and on each one-year anniversary thereafter, we have the option to convert the interest rate in use under each Supplement from the preceding LIBOR-based calculation to a variable interest rate, or the reverse, as applicable.

On July 1st of each year we have the option to convert the interest rate in use under each Supplement from the preceding LIBOR-based calculation to a variable interest rate, or the reverse, as applicable.

Any amounts outstanding under the Supplements are due and payable in full on July 1, 2022.

In April 2020, we entered into a Promissory Note with City National Bank for a $3.6 million loan (the “PPP Loan”) pursuant to the Paycheck Protection Program under the CARES Act.

The PPP Loan had a two-year term, an interest rate of 1.0% per annum, and was able to be prepaid at any time prior to maturity with no prepayment penalties.

In April 2020, we returned the $3.6 million in proceeds from the PPP Loan.

All indebtedness under the Loan Agreement, including any indebtedness under the Supplements, is secured by a first lien on certain of our agricultural properties in Tulare and Ventura counties in California and certain of our building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties.

All indebtedness under the Loan Agreement and RELOC with Farm Credit West, including any indebtedness under the Supplements, is secured by a first lien on certain of our agricultural properties in Tulare and Ventura counties in California and certain of our building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties.

The Loan Agreement includes customary default provisions that provide that should an event of default occur, Farm Credit West, at its option, may declare all or any portion of the indebtedness under the Loan Agreement to be immediately due and payable without demand, notice of non-payment, protest or prior recourse to collateral, and terminate or suspend our right to draw or request funds on any loan or line of credit.

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On May 29, 2020, the Loan Agreement was amended to adjust the debt service ratio to 1.00:1.0 for October 31, 2020.

We currently expect to be in compliance with our financial covenants as of October 31, 2020 based on current projections.

However, changes in the forecasts, estimates related to the impact of COVID-19, new developments and future disruptions could result in us not maintaining compliance with our financial covenants as of October 31, 2020.

In August 2020, Farm Credit West modified the covenant to defer measurement at October 31, 2020 and revert to a debt service coverage ratio of 1.25:1.0 measured as of October 31, 2021.

In February 2020, we received an annual patronage dividend of $1.0 million from Farm Credit West, of which $0.7 million was recorded as a reduction in interest expense and $0.3 million reduced our real estate development assets.

In July 2020, Farm Credit West declared an additional annual cash patronage dividend of $0.6 million received in August 2020, of which we recorded $0.4 million as a reduction in interest expense and $0.2 million reduction in our real estate development assets as of July 31, 2020.

In April 2020, we entered into a Promissory Note with City National Bank for a $3.6 million loan (the “PPP Loan”) pursuant to the Paycheck Protection Program under the CARES Act.

The PPP Loan had a two-year term, an interest rate of 1.0% per annum, and was able to be prepaid at any time prior to maturity with no prepayment penalties.

In April 2020, we returned the $3.6 million in proceeds from the PPP Loan.

We finance our working capital and other liquidity requirements primarily through cash from operations and our Farm Credit West Credit Facility, which includes the Loan Agreement, Supplements and RELOC.

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The Loan contains certain customary default provisions and the Joint Venture may prepay any amounts outstanding under the Loan without penalty.

The Joint Venture recorded a $45.0 million outstanding loan balance at April 30, 2020 related to this Loan.

The Joint Venture recorded a $39.4 million outstanding loan balance at July 31, 2020 related to this Loan.

The obligations under the Loan are guaranteed by certain principals from Lewis and by us.

Fixed Rate and Variable Rate Debt

Details of amounts included in long-term debt can be found above and in the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.

Details of amounts included in long-term debt can be found in the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

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Operating lease right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As none of our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

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Revenue from crop insurance proceeds is recorded when the amount can be reasonably determined and upon establishment of the present right to payment.

Rental Revenue - We account for our rental operations revenue in accordance with ASC 842, Leases.

Minimum rental revenues are generally recognized on a straight-line basis over the respective initial lease term.

Contingent rental revenues are contractually defined as to the percentage of rent received by us and are based on fees collected by the lessee.

Such revenues are recognized when actual results, based on collected fees reported by the tenant, are received.

Our rental arrangements generally require payment on a monthly or quarterly basis.

Real Estate Development Costs - We capitalize the planning, entitlement, construction and development costs associated with our various real estate projects.

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Recent Accounting Pronouncements

Please See Note 2 – "Summary of Significant Accounting Policies" of the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q for information concerning recent accounting pronouncements.

See Note 2 – "Summary of Significant Accounting Policies" of the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q for information concerning recent accounting pronouncements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis