What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-06-07 compared with 2022-03-10 · 279 added, 137 removed, 270 unchanged (61% of the section changed)

33 unchanged sentences

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

In fiscal year 2021, we sold a majority of our avocados to Calavo.

In fiscal year 2021, we sold a majority of our avocados to Calavo Growers, Inc.

Additionally, we sell our pistachios to a roaster, packager and marketer of nuts, and our wine grapes to various wine producers.

3 unchanged sentences

Fluctuations in price are a function of global supply and demand with weather conditions, such as unusually low temperatures, typically having the most dramatic effect on the amount of lemons supplied in any individual growing season.

We believe we have a competitive advantage by maintaining our own lemon packing operations, even though a significant portion of the costs related to these operations are fixed.

We believe we have a

competitive advantage by maintaining our own lemon packing operations, even though a significant portion of the costs related to these operations are fixed.

As a result, cost per carton is a function of fruit throughput.

36 unchanged sentences

According to the U.S.

Drought Monitor, Ventura County was experiencing moderate drought conditions and Tulare and San Bernardino Counties were experiencing severe drought conditions as of January 31, 2022.

Drought Monitor, Ventura and San Bernardino Counties were experiencing severe drought conditions and Tulare County was experiencing extreme drought conditions as of April 30, 2022.

In October 2021, the California Governor declared a drought state of emergency statewide.

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.

Federal officials who oversee the Central Valley Project, California’s largest water delivery system, allocated 0% of the contracted amount of water to San Joaquin Valley farmers in 2022 compared to 5% in 2021 and 100% in 2017 through 2020.

We are assessing the impact these reductions may have on our California orchards.

5 unchanged sentences

We are equal partners in a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of our East Area I real estate development project and formed Limoneira Lewis Community Builders, LLC ("LLCB") as the development entity.

LLCB has closed on lot sales representing 586 units from inception through January 31, 2022.

LLCB has closed on lot sales representing 586 units from inception through April 30, 2022.

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.

3 unchanged sentences

Wileman is a 95-year-old citrus business located in California’s Central Valley with a focus on oranges, mandarins and specialty citrus.

Effective November 1, 2021, our oranges and certain specialty citrus will be packed by Wileman.

Effective November 1, 2021, the majority of our oranges and certain specialty citrus are packed by Wileman.

In February 2022, we terminated our Avocado Marketing Agreement and the associated Letter Agreement Regarding Fruit Commitment with Calavo to pursue opportunities with other packing and marketing companies.

3 unchanged sentences

Teague whereas, (i) Mr.

Teague will be paid one year of his annual base salary, which shall be paid in one lump sum within ninety (90) business days of January 12, 2022;

Teague was paid one year of his annual base salary, which was paid in one lump sum within ninety (90) business days of January 12, 2022;

(ii) twenty-three thousand nine hundred ninety-nine (23,999) shares of our common stock granted to Mr.

Teague pursuant to the Limoneira Company Omnibus Incentive Plan shall fully vest;

Teague pursuant to the Limoneira Company Omnibus Incentive Plan fully vested;

and (iii) Mr.

Teague will receive certain other benefits as set forth in the agreement.

As of January 31, 2022, we accrued $0.4 million cash severance and $0.3 million accelerated vesting of stock-based compensation.

On December 14, 2021, we declared a cash dividend of $0.075 per common share paid on January 14, 2022, in the aggregate amount of $1.3 million to stockholders of record as of December 27, 2021.

As of April 30, 2022, we paid $0.4 million cash severance and recognized $0.3 million accelerated vesting of stock-based compensation.

In March 2022, we signed an agreement to lease Finca Santa Clara, our 1,200-acre lemon ranch in Argentina, to FGF Trapani ("FGF"), our 49% partner in Trapani Fresh.

The lease is retroactive beginning November 1, 2021, with a term of 14 months at a fixed sum of $400,000, payable in five equal, monthly installments beginning August 2022 until December 2022.

In April 2022, the promissory note previously received for the sale of our Centennial property, with net a carrying value of $2,350,000, was paid in full and the deferred gain of $161,000 was recognized in the second quarter of fiscal year 2022.

On March 23, 2022, we declared a cash dividend of $0.075 per common share paid on April 14, 2022, in the aggregate amount of $1.3 million to stockholders of record as of April 5, 2022.

COVID-19 Pandemic

The COVID-19 pandemic has had an adverse impact on the industries and markets in which we conduct business.

In particular, the United States lemon market has seen a significant decline in volume, with lemon demand falling since widespread shelter in place orders were issued in mid-March 2020, resulting in a significant market oversupply.

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

As of January 31, 2022, the demand within both markets is recovering but has not yet returned to pre-pandemic levels.

The decline in demand for our products beginning the second quarter of fiscal year 2020, which we believe was due to the COVID-19 pandemic, negatively impacted our sales and profitability for the last three quarters of fiscal year 2020, all of fiscal year 2021, and the first quarter of fiscal year 2022.

We also expect material adverse impacts on our sales and profitability in future periods.

The duration of these trends and the magnitude of such impacts cannot be estimated at this time, as they are influenced by a

number of factors, many of which are outside management’s control, including, but not limited, to those presented in Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended October 31, 2021.

In particular, the United States lemon market saw a significant decline in volume, with lemon demand falling since widespread shelter in place orders were issued in March 2020, resulting in a significant market oversupply.

The export market for fresh produce also significantly

declined due to the COVID-19 pandemic impacts.

As of April 30, 2022, the demand within both markets is recovering but has not yet returned to pre-pandemic levels.

We also expect COVID-19 to impact our sales and profitability in future periods.

The duration of these trends and the magnitude of such impacts cannot be estimated at this time, as they are influenced by a number of factors, many of which are outside management’s control, including, but not limited, to those presented in Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended October 31, 2021.

Notwithstanding the adverse impacts and subject to unforeseen changes that may arise as the COVID-19 pandemic continues, we currently expect improvement in fiscal year 2022 compared to fiscal year 2021.

7 unchanged sentences

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

Three Months Ended January 31,

Three Months Ended

April 30, Six Months Ended

2022 2021 2022 2021

Agribusiness $ 45,369 $ 43,989 $ 83,452 $ 81,126

4 unchanged sentences

Other operations 1,093 1,090 2,167 2,172

Gain on disposal of assets (85) —

Loss on disposal of assets, net 346 — 261 —

Selling, general and administrative 5,126 5,216 11,725 11,111

Total costs and expenses 44,164 42,748 92,996 86,663

Operating loss:

Operating income (loss):

Agribusiness 7,770 7,547 4,609 7,746

Other operations 288 53 405 109

Gain on disposal of assets 85 —

Loss on disposal of assets, net (346) — (261) —

Selling, general and administrative (5,126) (5,216) (11,725) (11,111)

Operating loss (9,558) (5,640)

Other income:

Operating income (loss) 2,586 2,384 (6,972) (3,256)

Other (expense) income:

Interest income 27 25 48 68

1 unchanged sentence

Equity in earnings of investments, net 299 643 350 1,009

Other income (expense), net 15 (6)

Total other income 302 537

Loss before income tax benefit (9,256) (5,103)

Income tax benefit 2,650 1,187

Net loss (6,606) (3,916)

Net loss (income) attributable to noncontrolling interest 88 (292)

Net loss attributable to Limoneira Company $ (6,518) $ (4,208)

Other income, net 78 57 93 51

Total other (expense) income (292) 103 10 640

Income (loss) before income tax (expense) benefit 2,294 2,487 (6,962) (2,616)

Income tax (expense) benefit (722) (974) 1,928 213

Net income (loss) 1,572 1,513 (5,034) (2,403)

Net (income) loss attributable to noncontrolling interest (11) 420 77 128

Net income (loss) attributable to Limoneira Company $ 1,561 $ 1,933 $ (4,957) $ (2,275)

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 named executive officer severance and gain on disposal of assets, 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 named executive officer severance and loss (gain) on disposal of assets, are important measures to evaluate our results of operations between periods on a more comparable basis.

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

1 unchanged sentence

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 $ (6,518) $ (4,208)

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

2022 2021 2022 2021

Net income (loss) attributable to Limoneira Company $ 1,561 $ 1,933 $ (4,957) $ (2,275)

Interest income (27) (25) (48) (68)

Interest expense, net of patronage dividends 696 622 481 488

Income tax benefit (2,650) (1,187)

Income tax expense (benefit) 722 974 (1,928) (213)

Depreciation and amortization 2,483 2,552 4,963 5,053

1 unchanged sentence

Named executive officer severance — — 770 —

Gain on disposal of assets (85) —

Loss (gain) on disposal of assets, net 346 (16) 261 (16)

Adjusted EBITDA $ 5,781 $ 6,040 $ (458) $ 2,969

Three Months Ended January 31, 2022 Compared to the Three Months Ended January 31, 2021

Total net revenues for the three months ended January 31, 2022 were $39.3 million compared to $38.3 million for the three months ended January 31, 2021.

The 3% increase of $1.0 million was primarily the result of increased lemons and avocados agribusiness revenues, partially offset by decreased specialty citrus and other crops agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended January 31,

Three Months Ended April 30, 2022 Compared to the Three Months Ended April 30, 2021

Total net revenues for the three months ended April 30, 2022 were $46.8 million, compared to $45.1 million for the three months ended April 30, 2021.

The 4% increase of $1.6 million was primarily the result of increased avocados and oranges agribusiness revenues, partially offset by decreased lemon agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended April 30,

2022 2021 Change

4 unchanged sentences

Agribusiness revenues $ 45,369 $ 43,989 $ 1,380 3%

The increase in the first three months of fiscal year 2022 was primarily the result of increased shipping and handling, compared to the same period of fiscal year 2021.

During the first three months of fiscal years 2022 and 2021, shipping and handling was $6.0 million and $4.9 million, respectively.

During the first three months of fiscal years 2022 and 2021, fresh lemon sales were $24.7 million and $25.0 million, in aggregate, on 1,207,000 and 1,320,000 cartons of lemons sold at average per carton prices of $20.48 and $18.91, respectively.

Lemon revenues in the first three months of fiscal years 2022 and 2021 included brokered fruit and other lemon sales of $3.9 million and $3.5 million and lemon by-product sales of $1.0 million and $0.8 million, respectively.

During the first three months of fiscal year 2022, 365,000 pounds of avocados were sold at an average per pound price of $2.10.

Due to harvest timing, no sales were recorded in the first quarter of fiscal year 2021.

The decrease in the first three months of fiscal year 2022 was primarily the result of decreased volumes, partially offset by higher prices of oranges sold, compared to the same period of fiscal year 2021.

In the first three months of fiscal years 2022 and 2021, we sold 53,000 and 119,000 40-pound carton equivalents of oranges at an average per carton price of $16.47 and $9.17, respectively.

The decrease in the second quarter of fiscal year 2022 was primarily the result of lower prices, partially offset by higher volume of fresh lemons sold, compared to the same period of fiscal year 2021.

During the second quarter of fiscal years 2022 and 2021, fresh lemon sales were $27.3 million and $28.7 million, in aggregate, on 1,552,000 and 1,528,000 cartons of lemons sold at average per carton prices of $17.57 and $18.79, respectively.

Lemon revenues in the second quarter of fiscal years 2022 and 2021 included shipping and handling of $6.7 million and $6.1 million, brokered fruit and other lemon sales of $2.7 million and $2.3 million and lemon by-product sales of $1.1 million and $1.6 million, respectively.

The increase in the second quarter of fiscal year 2022 was primarily the result of higher prices, partially offset by decreased volume of avocados sold, compared to the same period of fiscal year 2021.

During the second quarter of fiscal years 2022 and 2021, 1,877,000 and 2,142,000 pounds of avocados were sold at an average per pound price of $1.90 and $1.26, respectively.

The increase in the second quarter of fiscal year 2022 was primarily the result of increased volume, partially offset by lower prices of oranges sold, compared to the same period of fiscal year 2021.

In the second quarter of fiscal years 2022 and 2021, we sold 328,000 and 154,000 40-pound carton equivalents of oranges at an average per carton price of $7.98 and $9.12, respectively.

• Specialty citrus and other crops:

The decrease in the first three months of fiscal year 2022 was primarily the result of decreased volume and lower prices of specialty citrus sold, compared to the same period of fiscal year 2021.

During the first three months of fiscal years 2022 and 2021, we sold 51,000 and 115,000 40-pound carton equivalents of specialty citrus at an average per carton price of $14.63 and $15.46, respectively.

Other operations revenue in the first three months of fiscal years 2022 and 2021 was $1.2 million and $1.1 million, respectively.

The increase in the second quarter of fiscal year 2022 was primarily the result of increased volume, partially offset by lower prices of specialty citrus sold, compared to the same period of fiscal year 2021.

During the second quarter of fiscal years 2022 and 2021, we sold 254,000 and 129,000 40-pound carton equivalents of specialty citrus at an average per carton price of $5.68 and $9.11, respectively.

Other operations revenue in the second quarter of fiscal years 2022 and 2021 was $1.4 million and $1.1 million, respectively.

Costs and Expenses

Our total costs and expenses in the first three months of fiscal year 2022 were $48.8 million compared to $43.9 million in the same period of fiscal year 2021.

The 11% increase of $4.9 million was primarily attributable to increases in our packing costs and third-party grower and supplier costs.

Our total costs and expenses in the second quarter of fiscal year 2022 were $44.2 million, compared to $42.7 million in the same period of fiscal year 2021.

The 3% increase of $1.4 million was primarily attributable to increases in our packing costs and growing costs, partially offset by decreases in our third-party grower and supplier 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 suppliers and depreciation and amortization expense, as detailed below ($ in thousands):

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

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

2022 2021 Change

7 unchanged sentences

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 three months of fiscal years 2022 and 2021, lemon packing costs were $10.6 million and $9.5 million, respectively.

During the first three months of fiscal years 2022 and 2021, we packed and sold 1,207,000 and 1,320,000 cartons of lemons at average per carton costs of $8.74 and $7.22, respectively.

In the second quarter of fiscal years 2022 and 2021, lemon packing costs were $11.7 million and $10.9 million, respectively.

During the second quarter of fiscal years 2022 and 2021, we packed and sold 1,552,000 and 1,528,000 cartons of lemons at average per carton costs of $7.51 and $7.12, respectively.

The increase in average per carton cost is primarily due to costs of labor and benefits, cardboard cartons, fruit treatments and packaging and shipping supplies from inflation and supply chain issues.

Additionally, in the first three months of fiscal years 2022 and 2021, packing costs included $0.7 million and $0.8 million of shipping costs, respectively.

Additionally, in the second quarter of fiscal years 2022 and 2021, packing costs included $0.6 million and $0.8 million of shipping costs, respectively.

• Harvest costs:

The increase in the first three months of fiscal year 2022 was primarily the result of increased volume of lemons, oranges and avocados harvested compared to the same period in fiscal year 2021.

Harvest costs in the second quarter of fiscal year 2022 were similar to the same period in fiscal year 2021.

• 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 three months of fiscal year 2022 was primarily due to farm management decisions based on weather, harvest timing and crop conditions.

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 second quarter of fiscal year 2022 was primarily due to farm management decisions based on weather, harvest timing and crop conditions and inflation and supply chain issues.

• Third-party grower and supplier costs:

1 unchanged sentence

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

The increase in the first three months of fiscal year 2022 was primarily due to higher prices and increased volume of third-party grower fruit sold, compared to the same period of fiscal year 2021.

Of the 1,207,000 and 1,320,000 cartons of lemons packed and sold during the first three months of fiscal years 2022 and 2021, 693,000 (57%) and 637,000 (48%) were procured from third-party growers at average per carton prices of $16.28 and $14.63, respectively.

Additionally, in the first three months of fiscal years 2022 and 2021 we incurred $3.0 million and $2.0 million, respectively, of costs for purchased, packed fruit for resale.

The decrease in the second quarter of fiscal year 2022 was primarily due to lower prices, partially offset by increased volume of third-party grower fruit sold, compared to the same period of fiscal year 2021.

Of the 1,552,000 and 1,528,000 cartons of lemons packed and sold during the second quarter of fiscal years 2022 and 2021, 795,000 (51%) and 758,000 (50%) were procured from third-party growers at average per carton prices of $10.13 and $12.92, respectively.

Additionally, in the second quarter of fiscal years 2022 and 2021 we incurred $1.5 million and $0.5 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

Depreciation and amortization expense for the first three months of fiscal year 2022 was similar to the same period of fiscal year 2021.

Other operations expenses were $1.1 million in the first three months of fiscal years 2022 and 2021.

Selling, general and administrative costs and expenses were $6.6 million in the first three months of fiscal year 2022 compared to $5.9 million in the first three months of fiscal year 2021.

Depreciation and amortization expense for the second quarter of fiscal years 2022 and 2021 was $2.2 million and $2.3 million, respectively.

Other operations expenses were $1.1 million in the second quarter of fiscal years 2022 and 2021.

Selling, general and administrative costs and expenses were $5.1 million in the second quarter of fiscal year 2022 compared to $5.2 million in the second quarter of fiscal year 2021.

Other (Expense) Income

Other expense in the second quarter of fiscal year 2022 was comprised primarily of $(0.7) million of net interest expense, partially offset by $0.3 million of equity in earnings of investments.

Other income in the second quarter of fiscal year 2021 was comprised primarily of $0.6 million of equity in earnings of investments, partially offset by $(0.6) million of net interest expense.

We recorded an estimated income tax provision of $0.7 million and $1.0 million in the second quarter of fiscal years 2022 and 2021 on pre-tax income of $2.3 million and $2.5 million, respectively.

The tax provision recorded for the second quarter of fiscal year 2022 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, tax impact of stock-based compensation, and nondeductible tax items.

Our projected annual effective blended tax rate for fiscal year 2022, excluding discrete items, is approximately 32.5%.

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.

Six Months Ended April 30, 2022 Compared to the Six Months Ended April 30, 2021

Total net revenues for the six months ended April 30, 2022 were $86.0 million, compared to $83.4 million for the six months ended April 30, 2021.

The 3% increase of $2.6 million was primarily the result of increased lemons, avocados and oranges agribusiness revenues, partially offset by decreased specialty citrus and other crops agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Six Months Ended April 30,

2022 2021 Change

Lemons $ 73,303 $ 72,900 $ 403 1%

Avocados 4,342 2,707 1,635 60%

Oranges 3,490 2,495 995 40%

Specialty citrus and other crops 2,317 3,024 (707) (23)%

Agribusiness revenues $ 83,452 $ 81,126 $ 2,326 3%

The increase in the first six months of fiscal year 2022 was primarily the result of increased shipping and handling, partially offset by decreased fresh lemon sales, compared to the same period of fiscal year 2021.

During the first six months of fiscal years 2022 and 2021, fresh lemon sales were $52.0 million and $53.7 million, in aggregate, on 2,759,000 and 2,847,000 cartons of lemons sold at average per carton prices of $18.85 and $18.85, respectively.

Lemon revenues in the first six months of fiscal years 2022 and 2021 included shipping and handling of $12.7 million and $11.0 million, brokered fruit and other lemon sales of $6.5 million and $5.8 million and lemon by-product sales of $2.1 million and $2.5 million, respectively.

The increase in the first six months of fiscal year 2022 was primarily the result of higher prices and increased volume of avocados sold, compared to the same period of fiscal year 2021.

During the first six months of fiscal years 2022 and 2021, 2,242,000 and 2,142,000 pounds of avocados were sold at an average per pound price of $1.94 and $1.26, respectively.

The increase in the first six months of fiscal year 2022 was primarily the result of increased volume and higher prices of oranges sold, compared to the same period of fiscal year 2021.

In the first six months of fiscal years 2022 and 2021, we sold 381,000 and 273,000 40-pound carton equivalents of oranges at an average per carton price of $9.16 and $9.14, respectively.

• Specialty citrus and other crops:

The decrease in the first six months of fiscal year 2022 was primarily the result of lower prices, partially offset by increased volume of specialty citrus sold, compared to the same period of fiscal year 2021.

During the first six months of fiscal years 2022 and 2021, we sold 305,000 and 243,000 40-pound carton equivalents of specialty citrus at an average per carton price of $7.45 and $12.44, respectively.

Other operations revenue in the first six months of fiscal years 2022 and 2021 was $2.6 million and $2.3 million, respectively.

Costs and Expenses

Our total costs and expenses in the first six months of fiscal year 2022 were $93.0 million, compared to $86.7 million in the same period of fiscal year 2021.

The 7% increase of $6.3 million was primarily attributable to increases in our packing costs, growing costs and third-party grower and supplier costs.

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

2022 2021 Change

Packing costs $ 23,557 $ 22,030 $ 1,527 7%

Harvest costs 10,812 10,443 369 4%

Growing costs 16,275 14,825 1,450 10%

Third-party grower and supplier costs 23,827 21,585 2,242 10%

Depreciation and amortization 4,372 4,497 (125) (3)%

Agribusiness costs and expenses $ 78,843 $ 73,380 $ 5,463 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 2022 and 2021, lemon packing costs were $22.2 million and $20.4 million, respectively.

During the first six months of fiscal years 2022 and 2021, we packed and sold 2,759,000 and 2,847,000 cartons of lemons at average per carton costs of $8.05 and $7.17, respectively.

Additionally, in the first six months of fiscal years 2022 and 2021, packing costs included $1.3 million and $1.6 million of shipping costs, respectively.

• Harvest costs:

Harvest costs in the first six months of fiscal year 2022 were similar to the same period in fiscal year 2021.

• 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 2022 was primarily due to farm management decisions based on weather, harvest timing and crop conditions and inflation and supply chain issues.

• Third-party grower and supplier costs:

We sell fruit that we grow and fruit that we procure from other growers and suppliers.

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

The increase in the first six months of fiscal year 2022 was partially due to increased volume of third-party grower fruit sold, compared to the same period of fiscal year 2021.

Of the 2,759,000 and 2,847,000 cartons of lemons packed and sold during the first six months of fiscal years 2022 and 2021, 1,488,000 (54%) and 1,394,000 (49%) were procured from third-party growers at average per carton prices of $13.00 and $13.70, respectively.

Additionally, in the first six months of fiscal years 2022 and 2021, we incurred $4.5 million and $2.5 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

Depreciation and amortization expense for the first six months of fiscal years 2022 and 2021 was $4.4 million and $4.5 million, respectively.

Other operations expenses were $2.2 million in the first six months of fiscal years 2022 and 2021.

Selling, general and administrative costs and expenses were $11.7 million in the first six months of fiscal year 2022 compared to $11.1 million in the first six months of fiscal year 2021.

The 6% increase of $0.6 million primarily consisted of the following:

• Named executive officer severance for the first three months of fiscal year 2022 was $0.7 million compared to zero in the same period of fiscal year 2021.

• Selling expenses for the first three months of fiscal year 2022 was $0.1 million higher than the same period of fiscal year 2021.

• Other selling, general and administrative expenses, including certain corporate overhead expenses, for the first three months of fiscal year 2022 were $0.1 million lower than the same period of fiscal year 2021.

Other income in the first three months of fiscal year 2022 was comprised primarily of $0.1 million of equity in earnings of investments and $0.2 million of net interest income.

Other income in the first three months of fiscal year 2021 was comprised primarily of $0.4 million of equity in earnings of investments and $0.2 million of net interest income.

We recorded an estimated income tax benefit of $2.7 million and $1.2 million in the first three months of fiscal years 2022 and 2021 on pre-tax loss of $9.3 million and $5.1 million, respectively.

The tax benefit recorded for the first three months of fiscal year 2022 differs from the U.S.

• Named executive officer severance for the first six months of fiscal year 2022 was $0.7 million compared to zero in the same period of fiscal year 2021.

• Selling expenses for the first six months of fiscal year 2022 were $0.2 million higher than the same period of fiscal year 2021.

• Other selling, general and administrative expenses, including certain corporate overhead expenses, for the first six months of fiscal year 2022 were $0.4 million lower than the same period of fiscal year 2021.

Other (Expense) Income

Other income in the first six months of fiscal year 2022 was comprised primarily of $0.4 million of equity in earnings of investments, partially offset by $(0.4) million of net interest 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, partially offset by $(0.4) million of net interest expense.

We recorded an estimated income tax benefit of $1.9 million and $0.2 million in the first six months of fiscal years 2022 and 2021 on pre-tax loss of $7.0 million and $2.6 million, respectively.

The tax benefit recorded for the first six months of fiscal year 2022 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, tax impact of stock-based compensation, and nondeductible tax items.

Our projected annual effective blended tax rate for fiscal year 2022, excluding discrete items, is approximately 32.5%.

Net Loss (Income) Attributable to Noncontrolling Interest

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

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.

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, 2022 Compared to the Three Months Ended January 31, 2021

The following table shows the segment results of operations for the three months ended January 31, 2022 (in thousands):

Three Months Ended April 30, 2022 Compared to the Three Months Ended April 30, 2021

The following table shows the segment results of operations for the three months ended April 30, 2022 (in thousands):

Packing Eliminations

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Depreciation and amortization — — — — — 2,187 296 2,483

Operating (loss) income $ (2,561) $ 2,001 $ — $ 445 $ (861) $ (3,161) $ (6,397) $ (9,558)

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

Operating income (loss) $ 3,770 $ 4,454 $ — $ 1,503 $ 230 $ 7,770 $ (5,184) $ 2,586

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)

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

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 brokered fruit and other lemon revenue such as purchased, packed fruit for resale.

For the second quarter of fiscal years 2022 and 2021, our fresh lemons segment total net revenues were $31.0 million and $32.6 million, respectively.

The 5% decrease of $1.6 million was primarily due to a net decrease in fresh lemon sales of $1.4 million.

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

For the second quarter of fiscal years 2022 and 2021, our fresh lemons segment costs and expenses were $27.2 million and $28.6 million, respectively.

The 5% decrease of $1.4 million primarily consisted of the following:

• Harvest costs for the second quarter of fiscal year 2022 were $0.3 million lower than the same period of fiscal year 2021.

• Growing costs for the second quarter of fiscal year 2022 were $0.2 million lower than the same period of fiscal year 2021.

• Third-party grower and supplier costs for the second quarter of fiscal year 2022 were $0.8 million lower than the same period of fiscal year 2021.

• Transportation costs for the second quarter of fiscal year 2022 were $0.2 million lower than the same period of fiscal year 2021.

• Intersegment costs and expenses for the second quarter of fiscal year 2022 were $0.1 million higher than the same period of fiscal year 2021.

Lemon Packing

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

For the second quarter of fiscal years 2022 and 2021, our lemon packing segment total net revenues were $16.1 million and $15.4 million, respectively.

The 5% increase of $0.7 million was primarily due to increased price per carton of lemons packed.

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 2022 and 2021, our lemon packing costs and expenses were $11.7 million and $10.9 million, respectively.

The 7% increase of $0.8 million was primarily due to increased costs of labor and benefits, cardboard cartons, fruit treatments and packaging and shipping supplies from inflation and supply chain issues.

For the second quarter of fiscal years 2022 and 2021, lemon packing segment operating income per carton sold was $2.87 and $2.95, respectively.

In the second quarter of fiscal years 2022 and 2021, the lemon packing segment included $9.4 million and $9.3 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 year 2022 and 2021, our avocados segment had revenues of $3.6 million and $2.7 million, respectively.

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

For the second quarter of fiscal years 2022 and 2021, our avocados segment costs and expenses were $2.1 million and $1.4 million, respectively.

The increase of $0.6 million primarily consisted of the following:

• Harvest costs for the second quarter of fiscal year 2022 were $0.1 million higher than the same period of fiscal year 2021.

• Growing costs for the second quarter of fiscal year 2022 were $0.5 million higher than the same period of fiscal year 2021.

Other Agribusiness

For the second quarter of fiscal years 2022 and 2021, our other agribusiness segment total net revenues were $4.1 million and $2.6 million, respectively.

The 57% increase of $1.5 million primarily consisted of the following:

• Orange revenues for the second quarter of fiscal year 2022 were $1.2 million higher than the same period of fiscal year 2021.

• Specialty citrus and other crops revenues for the second quarter of fiscal year 2022 were $0.3 million higher compared to the same period of fiscal year 2021.

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

For the second quarter of fiscal years 2022 and 2021, our other agribusiness costs and expenses were $3.8 million and $2.5 million, respectively.

The 53% increase of $1.3 million primarily consisted of the following:

• Harvest costs for the second quarter of fiscal year 2022 were $0.2 million higher than the same period of fiscal year 2021.

• Growing costs for the second quarter of fiscal year 2022 were $1.0 million higher than the same period of fiscal year 2021

• Purchased fruit costs for the second quarter of fiscal year 2022 were $0.1 million higher than the same period of fiscal year 2021.

Total agribusiness depreciation and amortization expenses for the second quarter of fiscal year 2022 were $0.1 million lower than the same period of fiscal year 2021.

Corporate and Other

Our corporate and other operations had revenues of $1.4 million and $1.1 million for the second quarter of fiscal years 2022 and 2021, respectively.

Costs and expenses in our corporate and other operations for the second quarter of fiscal years 2022 and 2021 were approximately $6.3 million and $6.0 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 2022 and 2021 were similar at $0.3 million.

Six Months Ended April 30, 2022 Compared to the Six Months Ended April 30, 2021

The following table shows the segment results of operations for the six months ended April 30, 2022 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 60,592 $ 12,711 $ — $ 4,342 $ 5,807 $ 83,452 $ 2,572 $ 86,024

Intersegment revenue — 15,962 (15,962) — — — — —

Total net revenues 60,592 28,673 (15,962) 4,342 5,807 83,452 2,572 86,024

Costs and expenses 59,383 22,218 (15,962) 2,394 6,438 74,471 13,562 88,033

Depreciation and amortization — — — — — 4,372 591 4,963

Operating income (loss) $ 1,209 $ 6,455 $ — $ 1,948 $ (631) $ 4,609 $ (11,581) $ (6,972)

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 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 first three months of fiscal years 2022 and 2021, our fresh lemons segment total net revenues were $29.6 million and $29.3 million, respectively.

The 1% increase of $0.3 million was primarily due to an increase in brokered fruit and other lemon sales of $0.4 million, partially offset by a net decrease in fresh lemons and lemon by-products sales of $0.1 million.

For the first six months of fiscal years 2022 and 2021, our fresh lemons segment total net revenues were $60.6 million and $61.9 million, respectively.

The 2% decrease of $1.3 million was primarily due to a decrease in fresh lemon sales of $1.7 million.

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

For the first three months of fiscal years 2022 and 2021, our fresh lemons segment costs and expenses were $32.2 million and $29.5 million, respectively.

For the first six months of fiscal years 2022 and 2021, our fresh lemons segment costs and expenses were $59.4 million and $58.1 million, respectively.

The 2% increase of $1.2 million primarily consisted of the following:

• Harvest costs for the first three months of fiscal year 2022 were $0.7 million higher than the same period of fiscal year 2021.

• Growing costs for the first three months of fiscal year 2022 were $0.1 million lower than the same period of fiscal year 2021.

• Third-party grower and supplier costs for the first three months of fiscal year 2022 were $2.4 million higher than the same period of fiscal year 2021.

• Transportation costs for the first three months of fiscal year 2022 were $0.1 million lower than the same period of fiscal year 2021.

• Intersegment costs and expenses for the first three months of fiscal year 2022 were $0.1 million lower than the same period of fiscal year 2021.

• Harvest costs for the first six months of fiscal year 2022 were $0.4 million higher than the same period of fiscal year 2021.

• Growing costs for the first six months of fiscal year 2022 were $0.4 million lower than the same period of fiscal year 2021.

• Third-party grower and supplier costs for the first six months of fiscal year 2022 were $1.5 million higher than the same period of fiscal year 2021.

• Transportation costs for the first six months of fiscal year 2022 were $0.3 million lower than the same period of fiscal year 2021.

Lemon Packing

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

For the first three months of fiscal years 2022 and 2021, our lemon packing segment total net revenues were $12.6 million and $11.6 million, respectively.

For the first six months of fiscal years 2022 and 2021, our lemon packing segment total net revenues were $28.7 million and $27.0 million, respectively.

The 6% increase of $1.7 million was primarily due to increased price per carton of lemons packed.

For the first three months of fiscal years 2022 and 2021, our lemon packing costs and expenses were $10.6 million and $9.5 million, respectively.

For the first six months of fiscal years 2022 and 2021, our lemon packing costs and expenses were $22.2 million and $20.4 million, respectively.

The 9% increase of $1.8 million was primarily due to increased costs of labor and benefits, cardboard cartons, fruit treatments and packaging and shipping supplies from inflation and supply chain issues.

For the first three months of fiscal years 2022 and 2021, lemon packing segment operating income per carton sold was $1.66 and $1.55, respectively.

In the first three months of fiscal years 2022 and 2021, the lemon packing segment included $6.6 million and $6.7 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 2022 and 2021, lemon packing segment operating income per carton sold was $2.34 and $2.30, respectively.

In the first six months of fiscal years 2022 and 2021, the lemon packing segment included $16.0 million 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 three months of fiscal year 2022, our avocados segment had revenues of $0.8 million, compared to no revenues in the same period of fiscal year 2021.

For the first six months of fiscal years 2022 and 2021, our avocados segment had revenues of $4.3 million and $2.7 million, respectively.

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

For the first three months of fiscal years 2022 and 2021, our avocados segment costs and expenses were $0.3 million and zero, respectively.

The increase of $0.3 million primarily consisted of harvest costs.

For the first six months of fiscal years 2022 and 2021, our avocados segment costs and expenses were $2.4 million and $1.4 million, respectively.

The increase of $1.0 million primarily consisted of the following:

• Harvest costs for the first six months of fiscal year 2022 were $0.2 million higher than the same period of fiscal year 2021.

• Growing costs for the first six months of fiscal year 2022 were $0.8 million higher than the same period of fiscal year 2021.

Other Agribusiness

For the first three months of fiscal years 2022 and 2021, our other agribusiness segment total net revenues were $1.7 million and $2.9 million, respectively.

The 41% decrease of $1.2 million primarily consisted of the following:

• Orange revenues for the first three months of fiscal year 2022 were $0.2 million lower than the same period of fiscal year 2021.

• Specialty citrus and other crops revenues for the first three months of fiscal year 2022 were $1.0 million lower compared to the same period of fiscal year 2021.

For the first six months of fiscal years 2022 and 2021, our other agribusiness segment total net revenues were $5.8 million and $5.5 million, respectively.

The 5% increase of $0.3 million primarily consisted of the following:

• Orange revenues for the first six months of fiscal year 2022 were $1.0 million higher than the same period of fiscal year 2021.

• Specialty citrus and other crops revenues for the first six months of fiscal year 2022 were $0.7 million lower compared to the same period of fiscal year 2021.

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

For the first three months of fiscal years 2022 and 2021, our other agribusiness costs and expenses were $2.6 million and $2.4 million, respectively.

For the first six months of fiscal years 2022 and 2021, our other agribusiness costs and expenses were $6.4 million and $4.9 million, respectively.

The 32% increase of $1.6 million primarily consisted of the following:

• Harvest costs for the first three months of fiscal year 2022 were $0.4 million lower than the same period of fiscal year 2021.

• Purchased fruit costs for the first three months of fiscal year 2022 were $0.6 million higher than the same period of fiscal year 2021.

Total agribusiness depreciation and amortization expenses for the first three months of fiscal year 2022 were similar to the same period of fiscal year 2021.

• Harvest costs for the first six months of fiscal year 2022 were $0.2 million lower than the same period of fiscal year 2021.

• Growing costs for the first six months of fiscal year 2022 were $1.0 million higher than the same period of fiscal year 2021.

• Purchased fruit costs for the first six months of fiscal year 2022 were $0.7 million higher than the same period of fiscal year 2021.

Total agribusiness depreciation and amortization expenses for the first six months of fiscal year 2022 were $0.1 million lower than the same period of fiscal year 2021.

Corporate and Other

Our corporate and other operations had revenues of $1.2 million and $1.1 million for the first three months of fiscal years 2022 and 2021, respectively.

Costs and expenses in our corporate and other operations for the first three months of fiscal years 2022 and 2021 were approximately $7.4 million and $6.7 million, respectively, and include selling, general and administrative costs and expenses not allocated to the operating segments.

Depreciation and amortization expenses for the first three months of fiscal years 2022 and 2021 were similar at $0.3 million.

Our corporate and other operations had revenues of $2.6 million and $2.3 million for the first six months of fiscal years 2022 and 2021, respectively.

Costs and expenses in our corporate and other operations for the first six months of fiscal years 2022 and 2021 were approximately $13.6 million and $12.7 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 2022 and 2021 were similar at $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, 2022 and 2021

Results of Operations for the Trailing Twelve Months Ended April 30, 2022 and 2021

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

Trailing Twelve Months Ended January 31,

Trailing Twelve Months Ended April 30,

Agribusiness $ 163,707 $ 162,141

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Other operations 4,327 4,290

Gain on disposal of assets 24 502

Loss on disposal of assets, net 370 502

Selling, general and administrative 20,041 20,743

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Operating loss (10,049) (10,965)

Other income (expense):

Other income:

Interest income 359 430

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Equity in earnings of investments, net 2,544 1,839

Loss on stock in Calavo Growers, Inc.

Other income (expense), net 111 (302)

Total other income (expense) 1,936 (5,316)

Other income, net 131 35

Total other income 1,540 765

Loss before income tax benefit (8,509) (10,200)

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

• Total revenues increased $5.8 million in the twelve months ended January 31, 2022 compared to the twelve months ended January 31, 2021 primarily due to increased agribusiness revenues, particularly increased lemon sales.

• Total costs and expenses decreased $0.1 million in the twelve months ended January 31, 2022 compared to the twelve months ended January 31, 2021, primarily due to increases in our agribusiness costs, partially offset by decreases in selling, general and administrative expenses and the smaller gain on disposal of assets.

The increase in agribusiness costs is primarily attributable to increased costs of third-party grower and supplier fruit and cultural costs, partially offset by decreased packing costs and harvest costs.

• Total revenues increased $1.9 million in the twelve months ended April 30, 2022 compared to the twelve months ended April 30, 2021 primarily due to increased agribusiness revenues, particularly increased lemon sales.

• Total costs and expenses increased $1.0 million in the twelve months ended April 30, 2022 compared to the twelve months ended April 30, 2021, primarily due to increases in our agribusiness costs, partially offset by decreases in selling, general and administrative expenses.

The increase in agribusiness costs is primarily attributable to increased costs of growing and third-party grower and supplier fruit, partially offset by decreased packing and harvest costs.

The decrease in selling, general and administrative expenses is primarily attributable to decreased corporate expenses associated with our strategic initiatives.

• Total other income increased $7.3 million in the twelve months ended January 31, 2022 compared to the twelve months ended January 31, 2021 primarily due to increased equity in earnings of investments and decreased loss on stock in Calavo.

• Income tax benefit decreased $4.8 million in the twelve months ended January 31, 2022 compared to the twelve months ended January 31, 2021 primarily due to the decrease in pre-tax loss of $13.2 million.

• Total other income increased $0.8 million in the twelve months ended April 30, 2022 compared to the twelve months ended April 30, 2021 primarily due to increased equity in earnings of investments.

• Income tax benefit decreased $0.1 million in the twelve months ended April 30, 2022 compared to the twelve months ended April 30, 2021 primarily due to the decrease in pre-tax loss of $1.7 million.

Liquidity and Capital Resources

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In fiscal year 2021, we decided to terminate the Plan effective December 31, 2021.

The liabilities disclosed as of January 31, 2022, reflect an estimate of the additional cost to pay lump sums to a portion of the active and vested terminated participants and purchase annuities for all remaining participants from an insurance company.

See Notes 10, 11 and 15 to the consolidated financial statements in the Quarterly Report for amounts outstanding as of January 31, 2022, related to debt, leases and the Plan.

The liabilities disclosed as of April 30, 2022, reflect an estimate of the additional cost to pay lump sums to a portion of the active and vested terminated participants and purchase annuities for all remaining participants from an insurance company.

See Note 10 - Long-Term Debt, Note 11 - Leases and Note 15 - Retirement Plans to the consolidated financial statements in this Quarterly Report on Form 10-Q for amounts outstanding as of April 30, 2022, related to debt, leases and the Plan.

Purchase obligations consist of contracts primarily related to packing supplies and pollination services, the majority of which are due in the next three years.

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Cash Flows from Operating Activities

For the three months ended January 31, 2022 and 2021, net cash used in operating activities was $8.2 million and $1.8 million, respectively.

For the six months ended April 30, 2022, net cash used in operating activities was $1.2 million, compared to net cash provided by operating activities of $4.6 million for the six months ended April 30, 2021.

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

• Net loss for the three months ended January 31, 2022 and 2021 was $6.6 million and $3.9 million, respectively.

The components of net loss in the three months ended January 31, 2022 compared to the net loss in the same period in fiscal year 2021 consist of an increase in operating loss of $3.9 million, a decrease in total other income of $0.2 million and an increase in income tax benefit of $1.5 million.

• The adjustments to reconcile net loss to net cash used in operating activities were $1.1 million and $2.3 million in the three months ended January 31, 2022 and 2021, respectively, primarily due to changes in deferred income taxes.

• The changes in operating assets and liabilities used $2.6 million and $0.2 million of operating cash in the three months ended January 31, 2022 and 2021, respectively, primarily due to changes in income taxes receivable, accounts payable and growers and suppliers payable, and prepaid expenses and other current assets, partially offset by changes in accounts receivables/other from related parties and accrued liabilities and payables to related parties.

• Net loss for the six months ended April 30, 2022 and 2021 was $5.0 million and $2.4 million, respectively.

The components of net loss in the six months ended April 30, 2022, compared to the net loss in the same period in fiscal year 2021 consist of an increase in operating loss of $3.7 million, a decrease in total other income of $0.6 million and an increase in income tax benefit of $1.7 million.

• Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

◦ Provided $5.0 million and $6.0 million in the six months ended April 30, 2022 and 2021, respectively, primarily due to depreciation and amortization, stock compensation expense and deferred income taxes.

◦ Changes in operating assets and liabilities (used) provided $(1.1) million and $1.1 million of operating cash in the six months ended April 30, 2022 and 2021, respectively, primarily due to accounts receivables/other from related parties, cultural costs, prepaid expenses and other current assets and accrued liabilities and payables to related parties.

Cash Flows from Investing Activities

For the three months ended January 31, 2022 and 2021, net cash used in investing activities was $0.7 million and $3.6 million, respectively.

• Capital expenditures were $2.1 million in the three months ended January 31, 2022, comprised of $1.8 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 $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.

For the six months ended April 30, 2022 and 2021, net cash used in investing activities was $0.4 million and $5.5 million, respectively.

• Capital expenditures were $4.1 million in the six months ended April 30, 2022, comprised of $3.9 million for property, plant and equipment primarily related to orchard development and $0.2 million for real estate development projects.

• 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.

Cash Flows from Financing Activities

For the three months ended January 31, 2022 and 2021, net cash provided by financing activities was $9.3 million and $6.7 million, respectively.

• The $9.3 million of cash provided by financing activities during the three months ended January 31, 2022 was primarily comprised of net repayments of long-term debt in the amount of $11.7 million, partially offset by common and preferred dividends, in aggregate, of $1.5 million and the exchange of common stock of $0.9 million.

• 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 of $8.8 million, partially offset by common and preferred dividends, in aggregate, of $1.4 million.

For the six months ended April 30, 2022 and 2021, net cash provided by financing activities was $2.3 million and $1.9 million, respectively.

• The $2.3 million of cash provided by financing activities during the six months ended April 30, 2022 was primarily comprised of net borrowings of long-term debt in the amount of $6.5 million, partially offset by common and preferred dividends, in aggregate, of $2.9 million and the exchange of common stock of $1.1 million.

• 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 of $5.5 million, partially offset by common and preferred dividends, in aggregate, of $2.9 million.

Transactions Affecting Liquidity and Capital Resources

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In addition, we have the Farm Credit West term loans, Banco de Chile term loans and COVID-19 loans, and a note payable to the sellers of a land parcel.

Additional information regarding these loans and the note payable can be found in Note 10 to the consolidated financial statements included in this Quarterly Report.

Additional information regarding these loans and the note payable can be found in Note 10 - Long-Term Debt to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

In June 2021, we entered into the MLA with the Lender dated June 1, 2021, together with the Supplements and a Fixed Interest Rate Agreement.

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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.

As of January 31, 2022, our outstanding borrowings under the Farm Credit West Credit Facility were $123.8 million and we had $6.2 million of availability.

As of April 30, 2022, our outstanding borrowings under the Farm Credit West Credit Facility and RELOC were $119.1 million and we had $10.9 million of availability.

The MLA subjects us to affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, requirements to maintain and repair any collateral, restrictions on the sale of assets, restrictions on the use of proceeds, prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets of our business.

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We expect to be in compliance with these covenants in fiscal year 2022.

In the first quarter of fiscal years 2022 and 2021, Farm Credit West declared an annual patronage dividend of $1.6 million and $1.2 million, respectively, which we received in the second quarter of fiscal years 2022 and 2021.

Treasury Stock

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The holders of the Series B Convertible Preferred Stock (the “Series B Stock”) and the Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) are entitled to receive cumulative cash dividends.

Such preferred dividends paid were $0.1 million in the three months ended January 31, 2022 and 2021.

Cash dividends declared in the three months ended January 31, 2022 and 2021 were $0.075 per common share and such dividends paid were $1.3 million in the three months ended January 31, 2022 and 2021.

Such preferred dividends paid were $0.3 million in the six months ended April 30, 2022 and 2021, respectively.

Cash dividends declared in the six months ended April 30, 2022 and 2021 were $0.15 per common share and such dividends paid were $2.7 million in the six months ended April 30, 2022 and 2021.

Off-Balance Sheet Arrangements

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Actual results may materially differ from these estimates under different assumptions or conditions as new or additional information become available in future periods.

During the three months ended January 31, 2022, our critical accounting policies and estimates have not changed since the filing of our Annual Report on Form 10-K as of October 31, 2021.

During the six months ended April 30, 2022, our critical accounting policies and estimates have not changed since the filing of our Annual Report on Form 10-K as of October 31, 2021.

Please refer to that filing for a description of our critical accounting policies and estimates.

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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