What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-06-08 compared with 2021-03-10 · 272 added, 133 removed, 340 unchanged (54% of the section changed)

12 unchanged sentences

(“PDA”), a lemon and orange orchard and 100% interest in Agricola San Pablo, SpA ("San Pablo"), a lemon and orange orchard, all of which are located near La Serena, Chile.

We have a 51% interest in a joint venture, Trapani Fresh Consorcio de Cooperacion ("Trapani Fresh"), a lemon growing, packing, marketing and selling business in Argentina.

We have a 51% interest in a joint venture, Trapani Fresh Consorcio de Cooperacion ("Trapani Fresh"), a lemon orchard in Argentina.

Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own.

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California has experienced below average precipitation since 2018 and according to the U.S.

Drought Monitor, California is experiencing moderate drought conditions as of January 31, 2021.

Federal officials oversee the Central Valley Project, California’s largest water delivery system and 100% of the contracted amount of water was provided to San Joaquin Valley farmers in 2017 through 2020 compared to 75% in 2016 and zero in 2015 and 2014.

Drought Monitor, California is experiencing severe drought conditions as of April 30, 2021.

In May 2021, the California Governor declared a drought state of emergency for 41 of the 58 counties.

Federal officials who oversee the Central Valley Project, California’s largest water delivery system, allocated 5% of the contracted amount of water to San Joaquin Valley farmers in 2021 compared to 100% in 2017 through 2020.

Recent Developments

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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 398 units from inception through January 31, 2021, including 44 units in the first quarter of fiscal year 2021.

The Joint Venture has closed on lot sales representing 464 units from inception through April 30, 2021, including 110 units in fiscal year 2021.

For further information see Note 5 – Real Estate Development of the notes to consolidated financial statements included in this Quarterly Report on Form 10-Q.

1 unchanged sentence

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 fiscal year 2020, we purchased 250,977 shares under the share repurchase program for approximately $3.5 million.

As of January 31, 2021, the remaining authorization under this program is approximately $6.5 million.

On December 15, 2020, we declared a cash dividend of $0.075 per common share paid on January 15, 2021, in the aggregate amount of $1.3 million to stockholders of record as of December 28, 2020.

This program expired in March 2021.

On March 23, 2021, we declared a cash dividend of $0.075 per common share paid on April 16, 2021, in the aggregate amount of $1.3 million to stockholders of record as of April 5, 2021.

COVID-19 Pandemic

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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 beginning the second quarter of fiscal year 2020, which we believe was a result of the COVID-19 pandemic, negatively impacted our sales and profitability for the second, third and fourth quarters of fiscal year 2020 and in the first quarter of fiscal year 2021.

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

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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.

In addition, as the COVID-19 pandemic worsened throughout the spring of

2020, we allowed personnel to work remotely to the extent possible.

While we believe we have responded appropriately to mitigate the impacts of the COVID-19 pandemic, as the situation evolves, we will continue to analyze additional mitigation measures that may be needed to preserve the health and safety of our workforce and our customers and the ongoing continuity of our business operations.

In addition, as the COVID-19 pandemic worsened throughout the spring of 2020, we allowed personnel to work remotely to the extent possible.

While we believe we have responded appropriately to mitigate the impacts of the COVID-19 pandemic, as the situation evolves, we will continue to analyze additional mitigation measures that

may be needed to preserve the health and safety of our workforce and our customers and the ongoing continuity of our business operations.

Those measures might include modifying workspaces, continuing social distancing policies, implementing new personal protective equipment or health screening policies at our facilities, or such other industry best practices needed to continue to maintain a healthy and safe environment for our employees amidst the COVID-19 pandemic.

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economy, the ongoing business operations of our clients and our results of operations and financial condition.

While our management team is actively monitoring the impacts of the COVID-19 pandemic and may take further actions altering our business operations that we determine are in the best interests of our employees and clients or as required by federal, state, or local authorities, the full impact of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for fiscal year 2021 and beyond cannot be fully estimated at this point.

While our management team is actively monitoring the impacts of the COVID-19 pandemic and may take further actions altering our business operations that we determine are in the best interests of our employees and clients or as required by federal, state, or local authorities, the full impact of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for the second half of fiscal year 2021 and beyond cannot be fully estimated at this point.

The following discussions are subject to the future effects of the COVID-19 pandemic on our ongoing business operations.

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

Three Months Ended January 31,

Three Months Ended April 30, Six Months Ended April 30,

2021 2020 2021 2020

Agribusiness $ 43,989 $ 38,439 $ 81,126 $ 78,922

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Total costs and expenses 42,748 42,404 86,663 92,526

Operating (loss) income:

Operating income (loss):

Agribusiness 7,547 2,490 7,746 430

1 unchanged sentence

Selling, general and administrative (5,216) (5,338) (11,111) (11,648)

Operating loss (5,640) (8,466)

Operating income (loss) 2,384 (2,833) (3,256) (11,299)

Other income (expense):

Interest income 25 — 68 —

Interest expense, net of dividends 134 (170)

Interest expense, net of patronage dividends (622) (1,052) (488) (997)

Equity in earnings (losses) of investments, net 643 (371) 1,009 (491)

Loss on stock in Calavo Growers, Inc.

Other (expense) income, net (6) 515

— (4,275) — (6,299)

Other income (expense), net 57 (280) 51 235

Total other income (expense) 103 (5,978) 640 (7,552)

Loss before income tax benefit (5,103) (10,040)

Income tax benefit 1,187 3,136

Net loss (3,916) (6,904)

Net (income) loss attributable to noncontrolling interest (292) 477

Net loss attributable to Limoneira Company $ (4,208) $ (6,427)

Income (loss) before income tax (provision) benefit 2,487 (8,811) (2,616) (18,851)

Income tax (provision) benefit (974) 3,505 213 6,641

Net income (loss) 1,513 (5,306) (2,403) (12,210)

Net loss attributable to noncontrolling interest 420 423 128 900

Net income (loss) attributable to Limoneira Company $ 1,933 $ (4,883) $ (2,275) $ (11,310)

Non-GAAP Financial Measures

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The non-GAAP information provided is unique to us and may not be consistent with methodologies used by other companies.

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 January 31,

Net loss attributable to Limoneira Company $ (4,208) $ (6,427)

EBITDA and adjusted EBITDA are summarized and reconciled to net income (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,

2021 2020 2021 2020

Net income (loss) attributable to Limoneira Company $ 1,933 $ (4,883) $ (2,275) $ (11,310)

Interest income (25) — (68) —

Interest expense, net of dividends (134) 170

Income tax benefit (1,187) (3,136)

Interest expense, net of patronage dividends 622 1,052 488 997

Income tax provision (benefit) 974 (3,505) (213) (6,641)

Depreciation and amortization 2,552 2,433 5,053 4,998

1 unchanged sentence

Loss on stock in Calavo Growers, Inc.

— 4,275 — 6,299

(Gain) loss on sale and disposal of property assets (16) 514 (16) 514

Adjusted EBITDA $ 6,040 $ (114) $ 2,969 $ (5,143)

Three Months Ended January 31, 2021 Compared to the Three Months Ended January 31, 2020

Total net revenues for the first quarter of fiscal year 2021 were $38.3 million compared to $41.7 million for the same period of fiscal year 2020.

The 8% decrease of $3.4 million was primarily the result of decreased agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended January 31,

Three Months Ended April 30, 2021 Compared to the Three Months Ended April 30, 2020

Total net revenues for the second quarter of fiscal year 2021 were $45.1 million compared to $39.6 million for the same period of fiscal year 2020.

The 14% increase of $5.5 million was primarily the result of increased agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended April 30,

2021 2020 Change

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Agribusiness revenues $ 43,989 $ 38,439 $ 5,550 14%

The decrease in the first quarter of fiscal year 2021 was primarily the result of lower prices partially offset by increased volume of fresh lemons sold compared to the same period in fiscal year 2020.

During the first quarter of fiscal years 2021 and 2020, fresh lemon sales were $25.0 million and $27.0 million, 1,320,000 and 1,280,000 cartons of lemons sold at average per carton prices of $18.91 and $21.12, 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 first quarter of fiscal year 2021 compared to the same period in fiscal year 2020.

Lemon revenues in the first quarter of fiscal years 2021 and 2020 included $4.9 million and $4.1 million shipping and handling, $0.8 million and $1.0 million lemon by-products and $3.5 million and $4.0 million other lemon sales, respectively.

Due to harvest timing, no sales were recorded in the first quarter of fiscal year 2021 compared to sales of 125,000 pounds of avocados at an average per pound price of $1.34 in the first quarter of fiscal year 2020.

The decrease in the first quarter of fiscal year 2021 was primarily the result of decreased volume of oranges sold partially offset by higher prices compared to the same period in fiscal year 2020.

In the first quarter of fiscal years 2021 and 2020, we sold 119,000 and 196,000 40-pound carton equivalents of oranges at an average per carton price of $9.17 and $6.71, respectively.

Additionally, the fiscal year 2020 revenues included $0.1 million in Chile and $0.9 million of oranges purchased for resale.

The increase in the second quarter of fiscal year 2021 was primarily the result of increased volume and higher prices of fresh lemons sold compared to the same period in fiscal year 2020.

During the second quarter of fiscal years 2021 and 2020, fresh lemon sales were $28.7 million and $25.3 million on, in aggregate, 1,528,000 and 1,475,000 cartons of lemons sold at average per carton prices of $18.79 and $17.14, respectively.

Lemon revenues in the second quarter of fiscal years 2021 and 2020 included $6.1 million and $3.9 million shipping and handling, $1.6 million and $1.6 million lemon by-products and $2.3 million and $1.9 million other lemon sales, respectively.

The increase in the second quarter of fiscal year 2021 was primarily the result of increased volume of avocados sold partially offset by lower prices compared to the same period of fiscal year 2020.

During the second quarter of fiscal years 2021 and 2020, 2,142,000 and 1,233,000 pounds of avocados were sold at an average per pound price of $1.26 and $1.64, respectively.

The decrease in the second quarter of fiscal year 2021 was primarily the result of decreased volume of oranges sold partially offset by higher prices compared to the same period in fiscal year 2020.

In the second quarter of fiscal years 2021 and 2020, we sold 154,000 and 356,000 40-pound carton equivalents of oranges at an average per carton price of $9.12 and $7.49, respectively.

Additionally, in the second quarter of fiscal year 2021, revenues included $0.1 million in Chile and in the second quarter of fiscal year 2020, revenues included $0.6 million of oranges purchased for resale.

• Specialty citrus and other crops:

The slight decrease in the first quarter of fiscal year 2021 was primarily the result of decreased volume partially offset by increased prices of specialty citrus sold compared to the same period in fiscal year 2020.

During the first quarter of fiscal years 2021 and 2020, we sold 115,000 and 139,000 40-pound carton equivalents of specialty citrus at an average per carton price of $15.46 and $13.61, respectively.

Rental operations revenue in the first quarter of fiscal year 2021 was similar to the first quarter of fiscal year 2020.

Specialty citrus and other crops revenues in the second quarter of fiscal year 2021 were similar to the same period in fiscal year 2020.

During the second quarter of fiscal years 2021 and 2020, we sold 129,000 and 125,000 40-pound carton equivalents of specialty citrus at an average per carton price of $9.11 and $9.22, respectively.

Other operations revenue in the second quarter of fiscal year 2021 was similar to the same period of fiscal year 2020.

Costs and Expenses

Our total costs and expenses in the first quarter of fiscal year 2021 were $43.9 million compared to $50.1 million in the same period of fiscal year 2020.

The 12% decrease of $6.2 million was primarily attributable to decreases in our agribusiness costs partially offset by increased packing costs.

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 January 31,

Our total costs and expenses in the second quarter of fiscal year 2021 were $42.7 million compared to $42.4 million in the same period of fiscal year 2020.

The 1% increase of $0.3 million was primarily attributable to increases in our harvest costs and packing costs, partially offset by decreases in growing costs and third-party grower costs.

Costs and expenses associated with our agribusiness division 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,

2021 2020 Change

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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 first quarter of fiscal years 2021 and 2020, lemon packing costs were $9.5 million and $8.6 million, respectively.

During the first quarter of fiscal years 2021 and 2020, we packed and sold 1,320,000 and 1,280,000 cartons of lemons at average per carton costs of $7.22 and $6.70, respectively.

Additionally, packing costs included $0.8 million and $0.6 million of shipping costs in the first quarter of fiscal years 2021 and 2020, respectively.

In the second quarter of fiscal years 2021 and 2020, lemon packing costs were $10.9 million and $10.4 million, respectively.

During the second quarter of fiscal years 2021 and 2020, we packed and sold 1,528,000 and 1,475,000 cartons of lemons at average per carton costs of $7.12 and $7.06, respectively.

Additionally, in the second quarter of fiscal years 2021 and 2020, packing costs included $0.8 million and $0.7 million of shipping costs, respectively.

• Harvest costs:

The decrease in the first quarter of fiscal year 2021 was primarily the result of decreased volume of avocados, oranges and specialty citrus harvested compared to the same period in fiscal year 2020.

The increase in the second quarter of fiscal year 2021 was primarily the result of increased volume of lemons and avocados harvested partially offset by decreased volume of oranges and specialty citrus harvested compared to the same period in fiscal year 2020.

• 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 decrease in the first quarter of fiscal year 2021 was primarily due to farm management decisions based on weather, harvest timing and crop conditions.

The decrease in the second quarter of fiscal year 2021 was primarily due to farm management decisions based on weather, harvest timing and crop conditions.

• Third-party grower costs:

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

The decrease in the first quarter of fiscal year 2021 was primarily due to lower prices and decreased volume of third-party grower lemons sold compared to the same period of fiscal year 2020.

Of the 1,320,000 and 1,280,000 cartons of lemons packed and sold during the first quarter of fiscal years 2021 and 2020, 637,000 (48%) and 706,000 (55%) were procured from third-party growers at average per carton prices of $14.63 and $16.58, respectively.

Additionally, in the first quarter of fiscal year 2021 and 2020 we incurred $2.0 million and $3.4 million, respectively of costs for purchased, packed fruit for resale.

The decrease in the second quarter of fiscal year 2021 was primarily due to decreased volume of third-party grower lemons sold partially offset by higher prices compared to the same period of fiscal year 2020.

Of the 1,528,000 and 1,475,000 cartons of lemons packed and sold during the second quarter of fiscal years 2021 and 2020, 758,000 (50%) and 882,000 (60%) were procured from third-party growers at average per carton prices of $12.92 and $11.70, respectively.

Additionally, in the second quarter of fiscal year 2021 and 2020 we incurred $0.5 million and $0.9 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

Depreciation and amortization expense for the first quarter of fiscal year 2021 was approximately $0.1 million lower than the same period of fiscal year 2020.

Other operations expenses were $1.1 million and $1.3 million in the first quarter of fiscal years 2021 and 2020, respectively.

Selling, general and administrative costs and expenses were $5.9 million in the first quarter of fiscal year 2021 compared to $6.3 million in the first quarter of fiscal year 2020.

Depreciation and amortization expense for the second quarter of fiscal year 2021 was approximately $0.1 million higher than the same period of fiscal year 2020.

Other operations expenses were $1.1 million in the second quarter of fiscal years 2021 and 2020.

Selling, general and administrative costs and expenses were $5.2 million in the second quarter of fiscal year 2021 compared to $5.3 million in the second quarter of fiscal year 2020.

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

• Labor, benefits and incentive compensation for the first quarter of fiscal year 2021 were $0.4 million lower than the first quarter of fiscal year 2020.

• Training, depreciation and other costs associated with an ERP software implementation for the first quarter of fiscal year 2021 were $0.3 million lower than the first quarter of fiscal year 2020.

• General and administrative expenses, including certain corporate overhead expenses for the first quarter of fiscal year 2021 were $0.1 million lower than the first quarter of fiscal year 2020.

• Audit, audit-related and income tax fees for the first quarter of fiscal year 2021 were $0.4 million higher than the first quarter of fiscal year 2020.

• Audit, audit-related and income tax fees for the second quarter of fiscal year 2021 were $0.4 million lower than the same period of fiscal year 2020.

• Lemon selling expenses for the second quarter of fiscal year 2021 were $0.3 million lower than the same period of fiscal year 2020.

• Training, depreciation and other costs associated with an ERP software implementation for the second quarter of fiscal year 2021 were $0.1 million lower than the same period of fiscal year 2020.

• Labor, benefits and incentive compensation for the second quarter of fiscal year 2021 were $0.7 million higher than the same period of fiscal year 2020.

Other Income (Expense)

Other income for the three months ended January 31, 2021 was comprised primarily of $0.4 million of equity in earnings of investments and $0.2 million of net interest income.

Other expense for the three months ended January 31, 2020 was comprised primarily of $2.0 million loss on stock in Calavo Growers, Inc.

partially offset by $0.1 million of net interest income and $0.2 million of dividend income received from Calavo.

We recorded an estimated income tax benefit of $1.2 million and $3.1 million in the first quarter of fiscal years 2021 and 2020 on pre-tax loss of $5.1 million and $10.0 million, respectively.

The tax benefit recorded for the first quarter of fiscal year 2021 differs from the U.S.

Other income in the second quarter of fiscal year 2021 was comprised primarily of $0.6 million of equity in earnings of investments and $0.6 million of net interest expense.

Other expense in the second quarter of fiscal year 2020 was comprised primarily of $4.3 million loss on stock in Calavo Growers, Inc., $0.4 million of equity in losses of investments and $1.1 million of net interest expense.

We recorded an estimated income tax (provision) benefit of $(1.0) million and $3.5 million in the second quarter of fiscal years 2021 and 2020 on pre-tax income (loss) of $2.5 million and $(8.8) million, respectively.

The tax provision recorded for the second quarter of fiscal year 2021 differs from the U.S.

federal statutory tax rate of 21.0% due primarily to foreign jurisdictions which are taxed at different rates, state taxes, and nondeductible tax items.

Our projected annual effective blended tax rate for fiscal year 2021, excluding discrete items, is approximately 36.7%.

Net (Income) Loss Attributable to Noncontrolling Interest

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

Net Loss Attributable to Noncontrolling Interest

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

Six Months Ended April 30, 2021 Compared to the Six Months Ended April 30, 2020

Total net revenues for the six months ended April 30, 2021 were $83.4 million compared to $81.2 million for the six months ended April 30, 2020.

The 3% increase of $2.2 million was primarily the result of increased agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Six Months Ended April 30,

2021 2020 Change

Lemons $ 72,900 $ 68,749 $ 4,151 6%

Avocados 2,707 2,190 517 24%

Oranges 2,495 4,939 (2,444) (49)%

Specialty citrus and other crops 3,024 3,044 (20) (1)%

Agribusiness revenues $ 81,126 $ 78,922 $ 2,204 3%

The increase in the first six months of fiscal year 2021 was primarily the result of increased volume of fresh lemons sold partially offset by lower prices compared to the same period in fiscal year 2020.

During the first six months of fiscal years 2021 and 2020, fresh lemon sales were $53.7 million and $52.3 million on, in aggregate, 2,847,000 and 2,755,000 cartons of lemons sold at average per carton prices of $18.85 and $18.99, respectively.

Lemon revenues in the first six months of fiscal years 2021 and 2020 included $11.0 million and $8.0 million shipping and handling, $2.5 million and $2.6 million lemon by-products and $5.8 million and $5.9 million other lemon sales, respectively.

The increase in the first six months of fiscal year 2021 was primarily the result of increased volume of avocados sold partially offset by lower prices compared to the same period of fiscal year 2020.

During the first six months of fiscal years 2021 and 2020, 2,142,000 and 1,359,000 pounds of avocados were sold at an average per pound price of $1.26 and $1.61, respectively.

The decrease in the first six months of fiscal year 2021 was primarily the result of decreased volume of oranges sold partially offset by higher prices compared to the same period in fiscal year 2020.

In the first six months of fiscal years 2021 and 2020, we sold 273,000 and 551,000 40-pound carton equivalents of oranges at an average per carton price of $9.14 and $8.75, respectively.

Additionally, in the first six months of both fiscal years 2021 and 2020, revenues included $0.1 million in Chile and in the first six months of fiscal year 2020, revenues included $1.4 million of oranges purchased for resale.

• Specialty citrus and other crops:

Specialty citrus and other crops revenues in the first six months of fiscal year 2021 were similar to the same period in fiscal year 2020.

During the first six months of fiscal years 2021 and 2020, we sold 243,000 and 256,000 40-pound carton equivalents of specialty citrus at an average per carton price of $12.44 and $11.89, respectively.

Other operations revenue in the first six months of fiscal year 2021 was similar to the same period of fiscal year 2020.

Costs and Expenses

Our total costs and expenses in the first six months of fiscal year 2021 were $86.7 million compared to $92.5 million in the same period of fiscal year 2020.

The 6% decrease of $5.9 million was primarily attributable to decreases in our growing and third-party grower costs partially offset by increased packing costs.

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

2021 2020 Change

Packing costs $ 22,030 $ 20,286 $ 1,744 9%

Harvest costs 10,443 10,852 (409) (4)%

Growing costs 14,825 16,591 (1,766) (11)%

Third-party grower costs 21,585 26,319 (4,734) (18)%

Depreciation and amortization 4,497 4,444 53 1%

Agribusiness costs and expenses $ 73,380 $ 78,492 $ (5,112) (7)%

• Packing costs:

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 first six months of fiscal years 2021 and 2020, lemon packing costs were $20.4 million and $19.0 million, respectively.

During the first six months of fiscal years 2021 and 2020, we packed and sold 2,847,000 and 2,755,000 cartons of lemons at average per carton costs of $7.17 and $6.89, respectively.

Additionally, in the first six months of fiscal years 2021 and 2020, packing costs included $1.6 million and $1.3 million of shipping costs, respectively.

• Harvest costs:

The decrease in the first six months of fiscal year 2021 was primarily the result of decreased volume of oranges and specialty citrus harvested partially offset by increased volume of lemons and avocados harvested compared to the same period in fiscal year 2020.

• 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 decrease in the first six months of fiscal year 2021 was primarily due to farm management decisions based on weather, harvest timing and crop conditions.

• Third-party grower costs:

We sell lemons that we grow and lemons that we procure from other growers.

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

The decrease in the first six months of fiscal year 2021 was primarily due to decreased volume and lower prices of third-party grower lemons sold compared to the same period of fiscal year 2020.

Of the 2,847,000 and 2,755,000 cartons of lemons packed and sold during the first six months of fiscal years 2021 and 2020, 1,394,000 (49%) and 1,587,000 (58%) were procured from third-party growers at average per carton prices of $13.70 and $13.87, respectively.

Additionally, in the first six months of fiscal year 2021 and 2020 we incurred $2.5 million and $4.3 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

Depreciation and amortization expense for the first six months of fiscal year 2021 was approximately $0.1 million higher than the same period of fiscal year 2020.

Other operations expenses were $2.2 million and $2.4 million in the first six months of fiscal years 2021 and 2020, respectively.

Selling, general and administrative costs and expenses were $11.1 million in the first six months of fiscal year 2021 compared to $11.6 million in the first six months of fiscal year 2020.

The 5% decrease of $0.5 million primarily consisted of the following:

• Lemon selling expenses for the first six months of fiscal year 2021 were $0.6 million lower than the same period of fiscal year 2020.

• Training, depreciation and other costs associated with an ERP software implementation for the first six months of fiscal year 2021 were $0.4 million lower than the same period of fiscal year 2020.

• Labor, benefits and incentive compensation for the first six months of fiscal year 2021 were $0.6 million higher than the same period of fiscal year 2020.

• General and administrative expenses, including certain corporate overhead expenses, for the first six months of fiscal year 2021 were $0.2 million lower than the same period of fiscal year 2020.

Other Income (Expense)

Other income in the first six months of fiscal year 2021 was comprised primarily of $1.0 million of equity in earnings of investments and $0.4 million of net interest expense.

Other expense in the first six months of fiscal year 2020 was comprised primarily of $6.3 million loss on stock in Calavo Growers, Inc., $0.5 million of equity in losses of investments and $1.0 million of net interest expense.

We recorded an estimated income tax benefit of $0.2 million and $6.6 million in the first six months of fiscal years 2021 and 2020 on pre-tax loss of $2.6 million and $18.9 million, respectively.

The tax benefit recorded for the first six months of fiscal year 2021 differs from the U.S.

federal statutory tax rate of 21.0% due primarily to foreign jurisdictions which are taxed at different rates, state taxes, and nondeductible tax items.

Our projected annual effective blended tax rate for fiscal year 2021, excluding discrete items, is approximately 36.7%.

Net Loss Attributable to Noncontrolling Interest

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

Segment Results of Operations

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See Note 18 - 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 January 31, 2021 Compared to the Three Months Ended January 31, 2020

The following table shows the segment results of operations for the three months ended January 31, 2021 (in thousands):

Three Months Ended April 30, 2021 Compared to the Three Months Ended April 30, 2020

The following table shows the segment results of operations for the three months ended April 30, 2021 (in thousands):

Packing Eliminations

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Depreciation and amortization — — — — — 2,285 267 2,552

Operating (loss) income $ (207) $ 2,051 $ — $ — $ 567 $ 199 $ (5,839) $ (5,640)

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

Operating income (loss) $ 3,971 $ 4,511 $ — $ 1,274 $ 76 $ 7,547 $ (5,163) $ 2,384

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

Packing Eliminations

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Depreciation and amortization — — — — — 2,160 273 2,433

Operating income (loss) $ 1,754 $ 2,009 $ — $ 461 $ 426 $ 2,490 $ (5,323) $ (2,833)

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

Fresh lemons segment revenue is comprised of sales of fresh lemons, lemon by-products and other lemon revenue such as purchased, packed fruit for resale.

For the second quarter of fiscal years 2021 and 2020, our fresh lemons segment total net revenues were $32.6 million and $28.7 million, respectively.

The 14% increase of $3.9 million was primarily due to increases in fresh lemon carton sales of $3.4 million, lemon by-products of $0.1 million and brokerage and other sales of $0.4 million.

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

For the second quarter of fiscal years 2021 and 2020, our fresh lemons segment costs and expenses were $28.6 million and $27.0 million, respectively.

The 6% increase of $1.7 million primarily consisted of the following:

• Harvest costs for the second quarter of fiscal year 2021 were $1.2 million higher than the same period of fiscal year 2020.

• Growing costs for the second quarter of fiscal year 2021 were $0.1 million higher than the same period of fiscal year 2020.

• Third-party grower costs for the second quarter of fiscal year 2021 were $0.4 million lower than the same period of fiscal year 2020.

• Transportation costs for the second quarter of fiscal year 2021 were $0.1 million higher than the same period of fiscal year 2020.

• Intersegment costs and expenses for the second quarter of fiscal year 2021 were $0.8 million higher than the same period of fiscal year 2020.

Lemon Packing

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

For the second quarter of fiscal years 2021 and 2020, our lemon packing segment total net revenues were $15.4 million and $12.3 million, respectively.

The 25% increase of $3.0 million was primarily due to higher average per carton pack revenue.

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 2021 and 2020, our lemon packing costs and expenses were $10.9 million and $10.3 million, respectively.

The 5% increase of $0.5 million was primarily due to increased volume of lemons packed at higher average per carton costs.

For the second quarter of fiscal years 2021 and 2020, lemon packing segment operating income per carton sold was $2.95 and $1.41, respectively.

In the second quarter of fiscal years 2021 and 2020, the lemon packing segment included $9.3 million and $8.5 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 second quarter of fiscal years 2021 and 2020, our avocados segment had total revenues of $2.7 million and $2.0 million, respectively.

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

For the second quarter of fiscal years 2021 and 2020, our avocados segment costs and expenses were $1.4 million and $1.6 million, respectively.

The 8% decrease of $0.1 million primarily consisted of growing costs.

Other Agribusiness

For the second quarter of fiscal years 2021 and 2020, our other agribusiness segment total net revenues were $2.6 million and $3.8 million, respectively.

The 32% decrease of $1.2 million primarily consisted of the following:

• Orange revenues for the second quarter of fiscal year 2021 were $1.3 million lower than the same period of fiscal year 2020.

• Specialty citrus and other crops revenues for the second quarter of fiscal year 2021 were similar to the same period of fiscal year 2020.

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 2021 and 2020, our other agribusiness costs and expenses were $2.5 million and $3.4 million, respectively.

The 26% decrease of $0.9 million primarily consisted of the following:

• Harvest costs for the second quarter of fiscal year 2021 were $0.4 million lower than the same period of fiscal year 2020.

• Growing costs for the second quarter of fiscal year 2021 were $0.1 million higher than the same period of fiscal year 2020.

• Purchased fruit costs for the second quarter of fiscal year 2021 were $0.6 million lower than the same period of fiscal year 2020.

Total agribusiness depreciation and amortization expenses for the second quarter of fiscal year 2021 were $0.1 million higher than the same period of fiscal year 2020.

Corporate and Other

Our corporate and other operations had revenues of $1.1 million for the second quarter of both fiscal years 2021 and 2020.

Costs and expenses in our corporate and other operations for the second quarter of fiscal years 2021 and 2020 were approximately $6.0 million and $6.2 million, respectively, and include selling, general and administrative costs and expenses not allocated to the operating segments.

Depreciation and amortization expenses for the second quarter of fiscal years 2021 and 2020 were similar at approximately $0.3 million.

Six Months Ended April 30, 2021 Compared to the Six Months Ended April 30, 2020

The following table shows the segment results of operations for the six months ended April 30, 2021 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 61,900 $ 11,000 $ — $ 2,707 $ 5,519 $ 81,126 $ 2,281 $ 83,407

Intersegment revenue — 15,967 (15,967) — — — — —

Total net revenues 61,900 26,967 (15,967) 2,707 5,519 81,126 2,281 83,407

Costs and expenses 58,136 20,405 (15,967) 1,433 4,876 68,883 12,727 81,610

Depreciation and amortization — — — — — 4,497 556 5,053

Operating income (loss) $ 3,764 $ 6,562 $ — $ 1,274 $ 643 $ 7,746 $ (11,002) $ (3,256)

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

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 60,772 $ 7,977 $ — $ 2,190 $ 7,983 $ 78,922 $ 2,305 $ 81,227

Intersegment revenue — 15,559 (15,559) — — — — —

Total net revenues 60,772 23,536 (15,559) 2,190 7,983 78,922 2,305 81,227

Costs and expenses 61,312 18,937 (15,559) 2,034 7,324 74,048 13,480 87,528

Depreciation and amortization — — — — — 4,444 554 4,998

Operating (loss) income $ (540) $ 4,599 $ — $ 156 $ 659 $ 430 $ (11,729) $ (11,299)

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Fresh lemons segment revenue is comprised of sales of fresh lemons, lemon by-products and other lemon revenue such as purchased, packed fruit for resale.

For the first quarter of fiscal years 2021 and 2020, our fresh lemons segment total net revenues were $29.3 million and $32.1 million, respectively.

The 9% decrease of $2.8 million was primarily due to decreases in fresh lemon carton sales of $2.1 million, lemon by-products of $0.2 million and brokerage and other sales of $0.5 million.

For the first six months of fiscal years 2021 and 2020, our fresh lemons segment total net revenues were $61.9 million and $60.8 million, respectively.

The 2% increase of $1.1 million was primarily due to increases in fresh

lemon carton sales of $1.4 million partially offset by decreases in lemon by-products of $0.1 million and decreases in brokerage and other sales of $0.1 million.

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

For the first quarter of fiscal years 2021 and 2020, our fresh lemons segment costs and expenses were $29.5 million and $34.4 million, respectively.

For the first six months of fiscal years 2021 and 2020, our fresh lemons segment costs and expenses were $58.1 million and $61.3 million, respectively.

The 5% decrease of $3.2 million primarily consisted of the following:

• Harvest costs for the first quarter of fiscal year 2021 were $1.1 million lower than the same period of fiscal year 2020.

• Growing costs for the first quarter of fiscal year 2021 were $0.7 million lower than the same period of fiscal year 2020.

• Third-party grower costs for the first quarter of fiscal year 2021 were $2.9 million lower than the same period of fiscal year 2020.

• Transportation costs for the first quarter of fiscal year 2021 were $0.3 million higher than the same period of fiscal year 2020.

• Intersegment costs and expenses for the first quarter of fiscal year 2021 were $0.4 million lower than the same period of fiscal year 2020.

• Harvest costs for the first six months of fiscal year 2021 were $0.1 million higher than the same period of fiscal year 2020.

• Growing costs for the first six months of fiscal year 2021 were $0.7 million lower than the same period of fiscal year 2020.

• Third-party grower costs for the first six months of fiscal year 2021 were $3.3 million lower than the same period of fiscal year 2020.

• Transportation costs for the first six months of fiscal year 2021 were $0.3 million higher than the same period of fiscal year 2020.

• Intersegment costs and expenses for the first six months of fiscal year 2021 were $0.4 million higher than the same period of fiscal year 2020.

Lemon Packing

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

For the first quarter of fiscal years 2021 and 2020, our lemon packing segment total net revenues were $11.6 million and $11.2 million, respectively.

The 3% increase of $0.4 million was primarily due to increased volume of lemons packed and sold.

For the first six months of fiscal years 2021 and 2020, our lemon packing segment total net revenues were $27.0 million and $23.5 million, respectively.

The 15% increase of $3.4 million was primarily due to higher average per carton pack revenue.

For the first quarter of fiscal years 2021 and 2020, our lemon packing costs and expenses were $9.5 million and $8.6 million, respectively.

For the first six months of fiscal years 2021 and 2020, our lemon packing costs and expenses were $20.4 million and $18.9 million, respectively.

The 8% increase of $1.5 million was primarily due to increased volume of lemons packed at higher average per carton costs.

For the first quarter of fiscal years 2021 and 2020, lemon packing segment operating income per carton sold was $1.55 and $2.02, respectively.

In the first quarter of fiscal years 2021 and 2020, the lemon packing segment included $6.7 million and $7.1 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

For the first six months of fiscal years 2021 and 2020, lemon packing segment operating income per carton sold was $2.30 and $1.67, respectively.

In the first six months of fiscal years 2021 and 2020, the lemon packing segment included $16.0 million and $15.6 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 quarter of fiscal year 2021, our avocados segment had no revenues, compared to $0.2 million in the same period of fiscal year 2020.

For the first six months of fiscal years 2021 and 2020, our avocados segment had total revenues of $2.7 million and $2.2 million, respectively.

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

For the first quarter of fiscal years 2021 and 2020, our avocados segment costs and expenses were zero and $0.5 million, respectively.

For the first six months of fiscal years 2021 and 2020, our avocados segment costs and expenses were $1.4 million and $2.0 million, respectively.

The 30% decrease of $0.6 million primarily consisted of growing costs.

Other Agribusiness

For the first quarter of fiscal years 2021 and 2020, our other agribusiness segment total net revenues were $2.9 million and $4.2 million, respectively.

For the first six months of fiscal years 2021 and 2020, our other agribusiness segment total net revenues were $5.5 million and $8.0 million, respectively.

The 31% decrease of $2.5 million primarily consisted of the following:

• Orange revenues for the first quarter of fiscal year 2021 were $1.2 million lower than the same period of fiscal year 2020.

• Specialty citrus and other crops revenues for the first quarter of fiscal year 2021 were similar to the same period of fiscal year 2020.

• Orange revenues for the first six months of fiscal year 2021 were $2.4 million lower than the same period of fiscal year 2020.

• Specialty citrus and other crops revenues for the first six months of fiscal year 2021 were similar to the same period of fiscal year 2020.

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

For the first quarter of fiscal years 2021 and 2020, our other agribusiness costs and expenses were $2.4 million and $3.9 million, respectively.

For the first six months of fiscal years 2021 and 2020, our other agribusiness costs and expenses were $4.9 million and $7.3 million, respectively.

The 33% decrease of $2.4 million primarily consisted of the following:

• Harvest costs for the first quarter of fiscal year 2021 were $0.2 million lower than the same period of fiscal year 2020.

• Growing costs for the first quarter of fiscal year 2021 were $0.5 million lower than the same period of fiscal year 2020.

• Purchased fruit costs for the first quarter of fiscal year 2021 were $0.9 million lower than the same period of fiscal year 2020.

Total agribusiness depreciation and amortization expenses for the first quarter of fiscal year 2021 were $0.1 million lower than the same period of fiscal year 2020.

• Harvest costs for the first six months of fiscal year 2021 were $0.6 million lower than the same period of fiscal year 2020.

• Growing costs for the first six months of fiscal year 2021 were $0.5 million lower than the same period of fiscal year 2020.

• Purchased fruit costs for the first six months of fiscal year 2021 were $1.4 million lower than the same period of fiscal year 2020.

Total agribusiness depreciation and amortization expenses for the first six months of fiscal year 2021 were $0.1 million higher than the same period of fiscal year 2020.

Corporate and Other

Our corporate and other operations had revenues of approximately $1.1 million and $1.2 million for the first quarter of fiscal years 2021 and 2020.

Costs and expenses in our corporate and other operations for the first quarter of fiscal years 2021 and 2020 were approximately $6.7 million and $7.3 million, respectively, and include selling, general and administrative costs and expenses not allocated to the operating segments.

Depreciation and amortization expenses for the first quarter of fiscal years 2021 and 2020 were similar at approximately $0.3 million.

Our corporate and other operations had revenues of $2.3 million for the first six months of both fiscal years 2021 and 2020.

Costs and expenses in our corporate and other operations for the first six months of fiscal years 2021 and 2020 were approximately $12.7 million and $13.5 million, respectively, and include selling, general and administrative costs and expenses not allocated to the operating segments.

Depreciation and amortization expenses for the first six months of fiscal years 2021 and 2020 were similar at approximately $0.6 million.

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 January 31, 2021 and 2020

Results of Operations for the Trailing Twelve Months Ended April 30, 2021 and 2020

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

Trailing Twelve Months Ended January 31,

Trailing Twelve Months Ended April 30,

Agribusiness $ 162,141 $ 163,848

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Other operations 4,290 4,599

Loss on sale and disposal of property assets 502 —

Loss (gain) on sale and disposal of property assets 502 (1,069)

Selling, general and administrative 20,743 22,960

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Operating loss (10,965) (12,788)

Other (expense) income:

Other income (expense):

Interest income 430 —

Interest expense, net of dividends (1,744) (2,619)

Interest expense, net of patronage dividends (1,539) (2,592)

Equity in earnings of investments, net 1,839 613

Loss on stock in Calavo Growers, Inc.

(4,275) (231)

Other (expense) income, net (302) 340

Total other (expense) income (5,316) 794

Other income, net 35 4

Total other income (expense) 765 (10,093)

Loss before income tax benefit (10,200) (22,881)

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

• Total revenues decreased $9.9 million in the twelve months ended January 31, 2021 compared to the twelve months ended January 31, 2020 primarily due to decreased agribusiness revenues, particularly decreased lemon sales.

• Total costs and expenses decreased $5.7 million in the twelve months ended January 31, 2021 compared to the twelve months ended January 31, 2020 primarily due to decreases in our agribusiness costs and selling, general and administrative expenses offset by increase in the loss on sale and disposal of property assets.

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

• Total other expense increased $6.1 million in the twelve months ended January 31, 2021 compared to the twelve months ended January 31, 2020 primarily due to increased loss on stock in Calavo and decreased equity in earnings of investments.

• Income tax benefit increased $4.1 million in the twelve months ended January 31, 2021 compared to the twelve months ended January 31, 2020 primarily due to the increase in pre-tax loss of $10.3 million.

• Total revenues decreased $1.8 million in the twelve months ended April 30, 2021 compared to the twelve months ended April 30, 2020 primarily due to decreased agribusiness revenues, which primarily consisted of decreased lemon and orange sales, partially offset by increased avocados sales.

• Total costs and expenses decreased $3.7 million in the twelve months ended April 30, 2021 compared to the twelve months ended April 30, 2020 primarily due to decreases in our agribusiness costs and selling, general and administrative expenses partially offset by increase in the loss on sale and disposal of property assets.

The decrease in agribusiness costs is primarily attributable to decreased cost of third-party grower fruit and the decrease in selling, general and administrative expenses is primarily attributable to decreased corporate expenses associated with our strategic initiatives.

• Total other income (expense) increased $10.9 million in the twelve months ended April 30, 2021 compared to the twelve months ended April 30, 2020 primarily due to decreased interest expense, increased equity in earnings of investments and decreased loss on stock in Calavo.

• Income tax benefit decreased $5.0 million in the twelve months ended April 30, 2021 compared to the twelve months ended April 30, 2020 primarily due to the decrease in pre-tax loss of $12.7 million.

Liquidity and Capital Resources

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Cash Flows from Operating Activities

For the three months ended January 31, 2021 and 2020, net cash used in operating activities was $1.8 million and $12.2 million, respectively.

For the six months ended April 30, 2021, net cash provided by operating activities was $4.6 million compared to net cash used in operating activities of $15.8 million for the six months ended April 30, 2020.

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

• Net loss for the three months ended January 31, 2021 was $3.9 million compared to net loss of $6.9 million for the three months ended January 31, 2020.

The components of net loss in the three months ended January 31, 2021 compared to the same period in fiscal year 2020 consist of a decrease in operating loss of $2.8 million, an increase in total other income of $2.1 million and a decrease in income tax benefit of $1.9 million.

• The adjustments to reconcile net loss to net cash used in operating activities provided $2.3 million of cash in the three months ended January 31, 2021 compared to providing $2.2 million of cash in the same period in fiscal year 2020, primarily due to significant changes in deferred income taxes, loss on stock in Calavo and equity in earnings of investments.

• The changes in operating assets and liabilities used $0.2 million of operating cash in the three months ended January 31, 2021 compared to using $7.5 million of operating cash in the same period in fiscal year 2020, primarily due to significant changes in accounts receivable and receivables/other from related parties, income taxes receivable and accounts payable and growers payable.

• Net loss for the six months ended April 30, 2021 was $2.4 million compared to net loss of $12.2 million for the six months ended April 30, 2020.

The components of net loss in the six months ended April 30, 2021 compared to the same period in fiscal year 2020 consist of a decrease in operating loss of $8.0 million, an increase in total other income of $8.2 million and a decrease in income tax benefit of $6.4 million.

• The adjustments to reconcile net loss to net cash provided by (used in) operating activities provided $6.0 million of cash in the six months ended April 30, 2021 compared to providing $6.8 million of cash in the same period in fiscal year 2020, primarily due to significant changes in deferred income taxes, loss on stock in Calavo and equity in earnings of investments.

• The changes in operating assets and liabilities provided $1.1 million of operating cash in the six months ended April 30, 2021 compared to using $10.4 million of operating cash in the same period in fiscal year 2020, primarily due to significant changes in accounts receivable and receivables/other from related parties, income taxes receivable and accounts payable and growers payable.

Cash Flows from Investing Activities

For the three months ended January 31, 2021 and 2020, net cash used in investing activities was $3.6 million and $6.5 million, respectively.

Net cash used in investing activities for the three months ended January 31, 2021 was primarily comprised of capital expenditures and investments.

• Capital expenditures were $3.4 million in the three months ended January 31, 2021, comprised of $3.1 million for property, plant and equipment primarily related to orchard and vineyard development and $0.3 million for real estate development projects.

• Capital expenditures were $3.7 million in the three months ended January 31, 2020, comprised of $3.5 million for property, plant and equipment primarily related to orchard and vineyard development and $0.2 million for real estate development projects.

Additionally, in the three months ended January 31, 2020, we contributed $2.8 million to the Joint Venture for the development of our East Area I real estate development project.

For the six months ended April 30, 2021 and 2020, net cash used in investing activities was $5.5 million compared to net cash provided by investing activities of $1.2 million, respectively.

Net cash used in investing activities for the six months ended April 30, 2021 was primarily comprised of capital expenditures.

• Capital expenditures were $5.4 million in the six months ended April 30, 2021, comprised of $5.2 million for property, plant and equipment primarily related to orchard and vineyard development and $0.2 million for real estate development projects.

• 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.

Cash Flows from Financing Activities

For the three months ended January 31, 2021 and 2020, net cash provided by financing activities was $6.7 million and $19.1 million, respectively.

• The $6.7 million of cash provided by financing activities during the three months ended January 31, 2021 was primarily comprised of net borrowings of long-term debt in the amount $8.8 million partially offset by common and preferred dividends, in aggregate, of $1.4 million.

• The $19.1 million of cash provided by financing activities during the three months ended January 31, 2020 was primarily comprised of net borrowings of long-term debt in the amount $20.7 million partially offset by common and preferred dividends, in aggregate, of $1.5 million.

For the six months ended April 30, 2021 and 2020, net cash provided by financing activities was $1.9 million and $15.4 million, respectively.

• The $1.9 million of cash provided by financing activities during the six months ended April 30, 2021 was primarily comprised of net borrowings of long-term debt in the amount $5.5 million partially offset by common and preferred dividends, in aggregate, of $2.9 million.

• 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.

Transactions Affecting Liquidity and Capital Resources

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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 January 31, 2021.

The borrowing capacity based on collateral value was $130.0 million at April 30, 2021.

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.

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We expect to be in compliance with these covenants in fiscal year 2021.

In February 2021, we received an annual patronage dividend of $1.2 million from Farm Credit West, of which $0.8 million was recorded as a reduction in interest expense and $0.4 million reduced our real estate development assets in the first quarter of fiscal year 2021.

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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to fund early development activities.

The Loan originally matured in January 2020 and was extended to February 22, 2021 per the terms thereof.

The Loan originally matured in January 2020 and was extended to February 22, 2021.

In February 2021, this loan was extended to February 22, 2023 with an option to extend to February 22, 2024, subject to certain conditions.

The interest rate on the Loan is LIBOR plus 2.85% and is payable monthly.

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 $17.4 million outstanding loan balance at January 31, 2021 related to this Loan.

The Joint Venture had an outstanding balance of $11.4 million as of April 30, 2021 related to this Loan.

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

In February 2021, this loan was extended to February 22, 2023 with an option to extend to February 22, 2024, subject to certain conditions.

Fixed Rate and Variable Rate Debt

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We recognize the majority of our revenue at a point in time when we satisfy a performance obligation and transfer control of the product to the respective customer.

The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of variable consideration such as allowances for estimated customer discounts or concessions, where applicable.

The amount of revenue that is recognized is based on the transaction price, which represents the

invoiced amount and includes estimates of variable consideration such as allowances for estimated customer discounts or concessions, where applicable.

The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.

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The acquisition method requires identifiable assets acquired and liabilities assumed and any noncontrolling interest in the business acquired be recognized and measured at fair value on the acquisition date, which is the date that the acquirer obtains control of the acquired business.

The amount by which the fair value of consideration transferred as the purchase price exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill.

The amount by which the fair value of consideration

transferred as the purchase price exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill.

Acquisitions that do not meet the definition of a business under the ASC are accounted for as asset acquisitions.

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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