What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-03-09 compared with 2022-09-08 · 187 added, 356 removed, 204 unchanged (73% of the section changed)

6 unchanged sentences

(“Sunkist”), we are one of the largest growers of lemons in the United States and, according to the California Avocado Commission, one of the largest growers of avocados in the United States.

In addition to growing lemons and avocados, we grow oranges and a variety of specialty citrus and other crops.

We have agricultural plantings throughout Ventura, Tulare, San Luis Obispo and San Bernardino Counties in California, Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 6,100 acres of lemons, 800 acres of avocados, 1,000 acres of oranges and 900 acres of specialty citrus and other crops.

We also operate our own packinghouses in Santa Paula and Oxnard, California and Yuma, Arizona, where we process, pack and sell lemons that we grow, as well as lemons grown by others.

In addition to growing lemons and avocados, we grow oranges and other crops.

We have agricultural plantings throughout Ventura, San Luis Obispo and San Bernardino Counties in California, Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 4,600 acres of lemons, 900 acres of avocados, 100 acres of oranges and 300 acres of other crops.

We also operate our own packinghouses in Santa Paula, California and Yuma, Arizona, where we process, pack and sell lemons that we grow, as well as lemons grown by others.

We have a 47% interest in Rosales S.A.

(“Rosales”), a citrus packing, marketing and sales business, a 90% interest in Fruticola Pan de Azucar S.A.

(“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.

(“PDA”), a lemon and orange orchard and a 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 orchard in Argentina.

1 unchanged sentence

Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers).

We use ground water from the San Joaquin Valley Basin and water from local water and irrigation districts in Tulare County, which is in California’s San Joaquin Valley.

We also use ground water from the Cadiz Valley Basin in California's San Bernardino County and surface water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District (“YMIDD”).

14 unchanged sentences

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

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 Growers, Inc.

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

We sell the majority of our avocados, oranges and specialty citrus to third-party packinghouses.

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

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

2 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.

1 unchanged sentence

Because the fresh utilization rate for our lemons, or percentage of lemons we harvest and pack that are sold to the fresh market, is directly related to the quality of lemons we pack and, consequently, the price we receive per 40-pound box, we only pack lemons from other growers if we determine their lemons are of good quality.

Our avocado producing business is important to us, yet it faces constraints on growth as there is little additional land with sufficient water that can be cost-effectively acquired to support new avocado orchards in Southern California.

Therefore, we are currently assessing all of our farmland in Ventura County for opportunities to expand our plantings of avocados.

Our avocado producing business is important to us, yet it faces constraints on growth.

We are currently assessing all of our farmland in Ventura County for opportunities to expand our plantings of avocados.

While avocado production is cyclical as avocados typically bear fruit on a bi-annual basis, the profitability and cash flow realized from our avocados helps to diversify our fruit production base.

In addition to growing lemons and avocados, we grow oranges, specialty citrus and other crops, typically utilizing land not suitable for growing high quality lemons.

We regularly monitor the demand for the fruit we grow in the ever-changing marketplace to identify trends.

For instance, while per capita consumption of oranges in the United States has been decreasing since 2000 primarily as a result of consumers increasing their consumption of mandarin oranges and other specialty citrus, the international market demand for U.S.

oranges has increased.

As a result, we have focused our orange production on high quality late season Navel oranges primarily for export to Japan, China and Korea, which are typically highly profitable niche markets.

We produce our specialty citrus and other crops in response to identified consumer trends and believe that we are a leader in the niche production and sale of certain of these high margin fruits.

We carefully monitor the respective markets of specialty citrus and other crops and we believe that demand for the types and varieties of specialty citrus and other crops that we grow will continue to increase throughout the world.

In addition to growing lemons and avocados, we grow oranges and other crops typically utilizing land not suitable for growing high quality lemons.

We regularly monitor the demand for the fruit we grow in the current marketplace to identify trends.

Rental Operations Summary

11 unchanged sentences

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.

We use ground water and water from local water districts in Tulare County and ground water in San Bernardino County.

Following our acquisition of Associated Citrus Packers, Inc.

("Associated"), we began using federal project water in Arizona from the Colorado River through the YMIDD.

We also have acquired water rights in Chile related to our acquisitions of PDA and San Pablo.

We use a combination of ground water provided by wells that derive water from the San Joaquin Valley Basin and water from various water districts and irrigation districts in Tulare County, California, which is in the agriculturally productive San Joaquin Valley.

We use ground water provided by wells which derive water from the Cadiz Valley Basin at the Cadiz Ranch in San Bernardino County, California.

Our Windfall Farms property located in San Luis Obispo County, California obtains water from wells that derive water from the Paso Robles Basin.

We believe we have adequate supplies of water for our agribusiness segments as well as our rental and real estate development activities.

Water for our farming operations located in Ventura County, California is sourced from the existing water resources associated with our land, which includes approximately 8,600 acre-feet of adjudicated water rights in the Santa Paula Basin (aquifer) and the un-adjudicated Fillmore Basin (acquifer).

We use ground water provided by wells that derive water from the Cadiz Valley Basin at the Cadiz Ranch in San Bernardino County, California.

Our Windfall Farms property located in San Luis Obispo County, California obtains water from wells that derive water from the Paso Robles Basin (aquifer).

Our Associated farming operations in Yuma, Arizona source water from the Colorado River through the YMIDD, where we have access to approximately 11,700 acre feet of Class 3 Colorado River water rights.

We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in La Serena, Chile and our Trapani Fresh farming operations in Argentina.

California has experienced below average precipitation since 2018.

California experienced above average precipitation during the first five months of the 2022 - 2023 rainfall season after experiencing below average precipitation the past three rainfall seasons.

The series of nine storms in December 2022 and January 2023 helped to alleviate the drought conditions in California.

Currently, the state is free from extreme drought conditions.

According to the U.S.

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

Drought Monitor, San Bernardino County was experiencing severe drought conditions and Ventura County was experiencing normal conditions as of February 28, 2023.

We continue to assess the impact drought conditions may have on our California orchards.

In August 2021, the U.S.

2 unchanged sentences

In August 2022, the U.S.

Bureau of Reclamation announced Lake Mead to operate in a Tier-2a shortage, which increases water restrictions for states in the southwest.

In January 2023, Arizona will forfeit an additional 80,000-acre feet of water from Lake Mead.

In response, we entered into a fallowing agreement and we are assessing the impact these additional reductions may have on our Arizona orchards.

Bureau of Reclamation announced Lake Mead to operate in a Tier 2 shortage, which increases water restrictions for states in the southwest.

In January 2023, Arizona forfeited approximately 21% of the state's yearly allotment of water from Lake Mead.

In response, we entered into a fallowing agreement in fiscal year 2022 and are assessing the impact these additional reductions may have on our Arizona orchards.

Recent Developments

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 July 31, 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.

In September 2021, we signed a Memorandum of Understanding with Wileman Bros.

& Elliott, Inc.

("Wileman"), to form an alliance to sell their combined citrus volumes under Limoneira's One World of Citrus trademark.

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, the majority of our oranges and certain specialty citrus are packed by Wileman.

In January 2022, we were notified of Alex M.

Teague’s decision to retire as Senior Vice President and Chief Operating Officer of our Company, effective February 1, 2022.

In connection with his retirement, we entered into a separation agreement with Mr.

Teague whereas, (i) Mr.

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 fully vested;

and (iii) Mr.

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

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

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.

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 $0.4 million, 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 a net carrying value of $2.4 million, was paid in full and the deferred gain of $0.2 million was recognized in the second quarter of fiscal year 2022.

In June 2022, we engaged with YMIDD in a two-year fallowing and forbearance program at our Associated Citrus Packers ranch in Yuma, Arizona.

We expect to receive payments totaling approximately $1.3 million during the program.

With the fallowing program in place, this ranch will have approximately 700 acres of productive lemons, 400 fallowed acres and 200 acres of other crops.

On June 28, 2022, we declared a cash dividend of $0.075 per common share paid on July 15, 2022, in the aggregate amount of $1.3 million to stockholders of record as of July 11, 2022.

In September 2022, we entered into an agreement with LLCB to sell our East Area 1 - Retained Property to potentially develop additional residential units.

We expect to close the transaction in the fourth quarter of fiscal year 2022, receive approximately $8.0 million in cash proceeds and record an estimated gain of approximately $4.7 million.

On October 10, 2022, we entered into a Purchase and Sale Agreement, as amended (the “Agreement”), with PGIM Real Estate Finance, LLC (“PGIM”) to sell 3,537 acres of land and citrus orchards in Tulare County, California (the “Northern Properties”) for a purchase price of approximately $100.4 million.

On January 25, 2023, the Board of Directors approved the Agreement, binding us to sell the Northern Properties and the transaction closed on January 31, 2023.

We received net cash proceeds of approximately $98.8 million and recorded a gain of approximately $40.0 million.

The proceeds were used primarily to pay down debt.

On January 31, 2023, we entered into a Farm Management Agreement (the “FMA”) with an affiliate of PGIM to provide farming, management and operations services related to the Northern Properties.

The FMA has an initial term expiring March 31, 2024, and thereafter continuing from year to year unless earlier terminated under the terms of the FMA.

Further, on January 31, 2023, we entered into a Grower Packing and Marketing Agreement to provide packing, marketing and selling services for lemons harvested on the Northern Properties for a minimum five-year term, subject to certain benchmarking standards.

During the three months ended January 31, 2023, the Company made funding contributions of $2.6 million to fully fund and settle the plan obligations of the Limoneira Company Retirement Plan.

Lump sum payments were made to a portion of the active and vested terminated participants and annuities were purchased for all remaining participants from an insurance company.

There are no remaining benefit obligations or plan assets and the remaining accumulated other comprehensive loss was fully recognized.

On November 30, 2022, we sold our Sevilla property and received net proceeds of $2.6 million and recorded an immaterial loss in the first quarter of fiscal year 2023.

On December 20, 2022, we declared a cash dividend of $0.075 per common share paid on January 13, 2023, in the aggregate amount of $1.3 million to stockholders of record as of January 3, 2023.

COVID-19 Pandemic

2 unchanged sentences

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

As of July 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 three quarters of fiscal year 2022.

We also expect the COVID-19 pandemic 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.

As of January 31, 2023, the demand within both markets is recovering but has not yet returned to pre-pandemic levels.

The decline in demand for the Company's products beginning the second quarter of fiscal year 2020, has negatively impacted our sales and profitability for the last three years.

The COVID-19 pandemic may impact our sales and profitability in future periods.

The duration of these trends and the magnitude of such impacts are uncertain and therefore 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, 2022.

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 2023 compared to fiscal year 2022.

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

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

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

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 customers 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 2022 and beyond cannot be fully estimated at this point.

Given the economic uncertainty as a result of the COVID-19 pandemic over the past three years, we have taken actions to improve our current liquidity position, including strategically selling certain assets, temporarily postponing capital expenditures and substantially reducing discretionary spending.

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

economy and the ongoing business operations of our customers.

The ongoing impact of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for fiscal year 2023 and beyond cannot be estimated at this time.

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

2 unchanged sentences

Three Months Ended

July 31, Nine Months Ended

2022 2021 2022 2021

Net revenues:

5 unchanged sentences

Other operations 1,238 1,074

Loss on disposal of assets, net 242 — 503 —

Gain on disposal of assets, net (39,742) (85)

Selling, general and administrative 9,280 6,599

3 unchanged sentences

Other operations 135 117

Loss on disposal of assets, net (242) — (503) —

Gain on disposal of assets, net 39,742 85

Selling, general and administrative (9,280) (6,599)

Operating income 11,060 3,374 4,088 118

Operating income (loss) 25,884 (9,558)

Other (expense) income:

2 unchanged sentences

Equity in earnings of investments, net 253 51

Other income, net 13 32 106 83

Other (expense) income, net (2,612) 15

Total other (expense) income (3,523) 302

Income before income tax provision 10,638 4,505 3,676 1,889

Income tax provision (3,313) (1,335) (1,385) (1,122)

Net income 7,325 3,170 2,291 767

Income (loss) before income tax (provision) benefit 22,361 (9,256)

Income tax (provision) benefit (6,827) 2,650

Net income (loss) 15,534 (6,606)

Net loss attributable to noncontrolling interest 97 88

Net income attributable to Limoneira Company $ 7,377 $ 3,705 $ 2,420 $ 1,430

Net income (loss) attributable to Limoneira Company $ 15,631 $ (6,518)

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 loss (gain) on disposal of assets, are important measures 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 stock-based compensation, named executive officer cash severance, pension settlement cost, gain on disposal of assets, net and cash bonus related to the sale of assets are important measures to evaluate our results of operations between periods on a more comparable basis.

Adjusted EBITDA in previous periods did not exclude stock-based compensation which has now been excluded as management believes this is a better representation of cash generated by operations and is consistent with peer company reporting.

Adjusted EBITDA for prior periods has been restated to conform to the current presentation.

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 income 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):

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

July 31, Nine Months Ended

2022 2021 2022 2021

Net income attributable to Limoneira Company $ 7,377 $ 3,705 $ 2,420 $ 1,430

Net income (loss) attributable to Limoneira Company $ 15,631 $ (6,518)

Interest income (8) (21)

Interest (expense), net of patronage dividends 1,172 (215)

Income tax provision 3,313 1,335 1,385 1,122

Income tax provision (benefit) 6,827 (2,650)

Depreciation and amortization 2,447 2,480

EBITDA $ 26,069 $ (6,924)

Named executive officer severance — — 770 —

Loss (gain) on disposal of assets, net 242 (4) 503 (20)

Stock-based compensation 1,064 997

Named executive officer cash severance — 432

Pension settlement cost 2,741 —

Gain on disposal of assets, net (39,742) (85)

Cash bonus related to sale of assets 2,000 —

Adjusted EBITDA $ (7,868) $ (5,580)

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

Total net revenues for the three months ended July 31, 2022 were $58.9 million, compared to $49.1 million for the three months ended July 31, 2021.

The 20% increase of $9.8 million was primarily the result of increased avocados and oranges agribusiness revenues, partially offset by decreased lemon agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended July 31,

2022 2021 Change

Lemons $ 40,160 $ 40,835 $ (675) (2)%

Avocados 12,578 4,073 8,505 209%

Oranges 3,736 1,981 1,755 89%

Specialty citrus and other crops 1,120 1,065 55 5%

Agribusiness revenues $ 57,594 $ 47,954 $ 9,640 20%

The decrease in the third quarter of fiscal year 2022 was primarily the result of decreased brokered fruit and other lemon sales, partially offset by increased fresh lemon sales and shipping and handling compared to the same period of fiscal year 2021.

During the third quarter of fiscal years 2022 and 2021, fresh lemon sales were $27.8 million and $24.4 million, in aggregate, on 1,512,000 and 1,144,000 cartons of lemons sold at average per carton prices of $18.39 and $21.34, respectively.

Lemon revenues in the third quarter of fiscal years 2022 and 2021 included shipping and handling of $6.3 million and $4.5 million, brokered fruit and other lemon sales of $5.0 million and $11.2 million, and lemon by-product sales of $1.1 million and $0.6 million, respectively.

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

During the third quarter of fiscal years 2022 and 2021, 5,694,000 and 3,513,000 pounds of avocados were sold at an average per pound price of $2.21 and $1.16, respectively.

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

In the third quarter of fiscal years 2022 and 2021, we sold 209,000 and 259,000 40-pound carton equivalents of oranges at an average per carton price of $17.88 and $7.65, respectively.

• Specialty citrus and other crops:

The increase in the third quarter of fiscal year 2022 was primarily the result of increased volume and higher prices of specialty citrus sold, compared to the same period of fiscal year 2021.

During the third quarter of fiscal years 2022 and 2021, we sold 61,000 and 45,000 40-pound carton equivalents of specialty citrus at an average per carton price of $18.34 and $14.04, respectively.

Other operations revenue in the third quarter of fiscal years 2022 and 2021 was $1.3 million and $1.2 million, respectively.

Costs and Expenses

Our total costs and expenses in the third quarter of fiscal year 2022 were $47.9 million, compared to $45.8 million in the same period of fiscal year 2021.

The 5% increase of $2.1 million was primarily attributable to increases in packing costs, harvest costs and selling, general and administrative expenses, partially offset by decreases in our growing and 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 July 31,

2022 2021 Change

Packing costs $ 12,463 $ 9,864 $ 2,599 26%

Harvest costs 6,219 3,383 2,836 84%

Growing costs 4,965 7,522 (2,557) (34)%

Third-party grower and supplier costs 15,644 17,828 (2,184) (12)%

Depreciation and amortization 2,172 2,094 78 4%

Agribusiness costs and expenses $ 41,463 $ 40,691 $ 772 2%

• 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 third quarter of fiscal years 2022 and 2021, lemon packing costs were $12.0 million and $9.3 million, respectively.

During the third quarter of fiscal years 2022 and 2021, we packed and sold 1,512,000 and 1,144,000 cartons of lemons at average per carton costs of $7.91 and $8.11, respectively.

Additionally, in the third quarter of fiscal years 2022 and 2021, packing costs included $0.5 million and $0.6 million of shipping costs, respectively.

• Harvest costs:

Harvest costs increased in the third quarter of fiscal year 2022 primarily as a result of increased volume of lemons and avocados harvested compared 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 decrease in the third quarter of fiscal year 2022 was primarily due to the lease of Finca Santa Clara in Argentina and farm management decisions based on weather, harvest timing and crop conditions.

• 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 decrease in the third 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 1,512,000 and 1,144,000 cartons of lemons packed and sold during the third quarter of fiscal years 2022 and 2021, 695,000 (46%) and 655,000 (57%) were procured from third-party growers at average per carton prices of $12.42 and $14.88, respectively.

Additionally, in the third quarter of fiscal years 2022 and 2021, we incurred $7.0 million and $8.1 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

Depreciation and amortization expense for the third quarter of fiscal years 2022 and 2021 was $2.2 million and $2.1 million, respectively.

Other operations expenses were $1.1 million and $1.0 million in the third quarter of fiscal years 2022 and 2021, respectively.

Loss on disposal of assets, net was $0.2 million and zero in the third quarter of fiscal years 2022 and 2021, respectively.

Selling, general and administrative costs and expenses were $5.0 million and $4.0 million in the third quarter of fiscal years 2022 and 2021, respectively.

The 24% increase of $1.0 million primarily consisted of the following:

• Salaries, benefits and incentive compensation in the third quarter of fiscal year 2022 was $1.0 million higher than the same period of fiscal year 2021.

• Other selling, general and administrative expenses, including certain corporate overhead expenses in the third quarter of fiscal year 2022 were $0.1 million higher than the same period of fiscal year 2021.

Other (Expense) Income

Other expense in the third quarter of fiscal year 2022 was comprised primarily of $(0.8) million of net interest expense, partially offset by $0.3 million of equity in earnings of investments.

Other income in the third quarter of fiscal year 2021 was comprised primarily of $1.5 million of equity in earnings of investments, partially offset by $(0.4) million of net interest expense.

We recorded an estimated income tax provision of $3.3 million and $1.3 million in the third quarter of fiscal years 2022 and 2021 on pre-tax income of $10.6 million and $4.5 million, respectively.

The tax provision recorded for the third 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 41.3%.

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.

Nine Months Ended July 31, 2022 Compared to the Nine Months Ended July 31, 2021

Total net revenues for the nine months ended July 31, 2022 were $144.9 million, compared to $132.5 million for the nine months ended July 31, 2021.

The 9% increase of $12.4 million was primarily the result of increased avocados and oranges agribusiness revenues, partially offset by decreased lemons and specialty citrus and other crops agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Nine Months Ended July 31,

Three Months Ended January 31, 2023 Compared to the Three Months Ended January 31, 2022

Total net revenues for the three months ended January 31, 2023 were $37.9 million, compared to $39.3 million for the three months ended January 31, 2022.

The 3% decrease of $1.4 million was primarily the result of decreased lemon and avocado agribusiness revenues, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended January 31,

2023 2022 Change

4 unchanged sentences

Agribusiness revenues $ 36,528 $ 38,083 $ (1,555) (4)%

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

During the first nine months of fiscal years 2022 and 2021, fresh lemon sales were $79.8 million and $78.1 million, in aggregate, on 4,271,000 and 3,992,000 cartons of lemons sold at average per carton prices of $18.68 and $19.56, respectively.

Lemon revenues in the first nine months of fiscal years 2022 and 2021 included shipping and handling of $19.0 million and $15.5 million, brokered fruit and other lemon sales of $11.5 million and $17.0 million, respectively, and lemon by-product sales of $3.1 million in both fiscal years.

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

During the first nine months of fiscal years 2022 and 2021, 7,936,000 and 5,655,000 pounds of avocados were sold at an average per pound price of $2.13 and $1.20, respectively.

The increase in the first nine 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 nine months of fiscal years 2022 and 2021, we sold 590,000 and 533,000 40-pound carton equivalents of oranges at an average per carton price of $12.25 and $8.40, respectively.

The decrease in the first quarter of fiscal year 2023 was primarily the result of decreased brokered fruit and decreased shipping and handling compared to the same period of fiscal year 2022.

During the first quarter of fiscal years 2023 and 2022, fresh lemon sales were $24.7 million and $24.7 million, in aggregate, on 1,308,000 and 1,207,000 cartons of lemons sold at average per carton prices of $18.88 and $20.48, respectively.

Lemon revenues in the first quarter of fiscal years 2023 and 2022 included shipping and handling of $5.6 million and $6.0 million, brokered fruit and other lemon sales of $2.5 million and $3.9 million, and lemon by-product sales of $1.2 million and $1.0 million, respectively.

Due to harvest timing, no sales were recorded in the first quarter of fiscal year 2023 compared to sales of 365,000 pounds of avocados at an average per pound price of $2.10 in the first quarter of fiscal year 2022.

The increase in the first quarter of fiscal year 2023 was primarily the result of increased volume and higher prices of oranges sold, compared to the same period of fiscal year 2022.

In the first quarter of fiscal years 2023 and 2022, we sold 64,000 and 53,000 40-pound carton equivalents of oranges at an average per carton price of $18.00 and $16.47, respectively.

• Specialty citrus and other crops:

The decrease in the first nine 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 nine months of fiscal years 2022 and 2021, we sold 366,000 and 289,000 40-pound carton equivalents of specialty citrus at an average per carton price of $9.26 and $12.40, respectively.

Other operations revenue in the first nine months of fiscal years 2022 and 2021 was $3.9 million and $3.5 million, respectively.

The increase in the first quarter of fiscal year 2023 was primarily the result of increased volume and higher prices of specialty citrus sold, compared to the same period of fiscal year 2022.

During the first quarter of fiscal years 2023 and 2022, we sold 54,000 and 51,000 40-pound carton equivalents of specialty citrus at an average per carton price of $23.09 and $14.63, respectively.

Other operations revenue in the first quarter of fiscal years 2023 and 2022 was $1.4 million and $1.2 million , respectively.

Costs and Expenses

Our total costs and expenses in the first nine months of fiscal year 2022 were $140.9 million, compared to $132.4 million in the same period of fiscal year 2021.

The 6% increase of $8.4 million was primarily attributable to increases in our packing costs, harvest costs and selling, general and administrative expenses, partially offset by decreases in our growing costs.

Our total costs and expenses in the first quarter of fiscal year 2023 were $12.0 million, compared to $48.8 million in the same period of fiscal year 2022.

The 75% decrease of $36.8 million was primarily the result of increased gain on disposal of assets, net primarily related to the Northern Properties sale.

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

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

2023 2022 Change

6 unchanged sentences

• 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 nine months of fiscal years 2022 and 2021, lemon packing costs were $34.2 million and $29.7 million, respectively.

During the first nine months of fiscal years 2022 and 2021, we packed and sold 4,271,000 and 3,992,000 cartons of lemons at average per carton costs of $8.00 and $7.44, respectively.

Additionally, in the first nine months of fiscal years 2022 and 2021, packing costs included $1.8 million and $2.2 million of shipping costs, respectively.

Packing costs consist primarily 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 2023 and 2022, lemon packing costs were $11.4 million and $10.6 million, respectively.

During the first quarter of fiscal years 2023 and 2022, we packed and sold 1,308,000 and 1,207,000 cartons of lemons at average per carton costs of $8.68 and $8.74, respectively.

Additionally, in the first quarter of fiscal years 2023 and 2022, packing costs included $1.0 million and $0.7 million of shipping costs, respectively.

• Harvest costs:

Harvest costs increased in the first nine months of fiscal year 2022 primarily as a result of increased volume of lemons and avocados harvested compared to the same period in fiscal year 2021.

The decrease in the first quarter of fiscal year 2023 was primarily the result of decreased volume of lemons and avocados harvested compared to the same period in fiscal year 2022.

• 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 nine months of fiscal year 2022 was primarily due to the lease of Finca Santa Clara in Argentina, partially offset by increases related to farm management decisions based on weather, harvest timing and crop conditions.

The decrease in the first quarter of fiscal year 2023 was primarily the result of farm management decisions based on weather, harvest timing and crop conditions.

• 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 nine months of fiscal year 2022 was primarily due to increased volume, partially offset by lower prices of third-party grower fruit sold, compared to the same period of fiscal year 2021.

Of the 4,271,000 and 3,992,000 cartons of lemons packed and sold during the first nine months of fiscal years 2022 and 2021, 2,183,000 (51%) and 2,048,000 (51%) were procured from third-party growers at average per carton prices of $12.81 and $14.08, respectively.

Additionally, in the first nine months of fiscal years 2022 and 2021, we incurred $11.5 million and $10.6 million, respectively, of costs for purchased, packed fruit for resale.

The increase in the first quarter of fiscal year 2023 was primarily the result of increased volume, partially offset by decreased prices of third-party grower fruit sold, compared to the same period of fiscal year 2022.

Of the 1,308,000 and 1,207,000 cartons of lemons packed and sold during the first quarter of fiscal years 2023 and 2022, 866,000 (66%) and 693,000 (57%), respectively, were procured from third-party growers at average per carton prices of $13.60 and $16.28.

Additionally, in the first quarter of fiscal years 2023 and 2022, we incurred $3.2 million and $3.0 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

Depreciation and amortization expense for the first nine months of fiscal years 2022 and 2021 was $6.5 million and $6.6 million, respectively.

Other operations expenses were $3.3 million and $3.2 million in the first nine months of fiscal years 2022 and 2021, respectively.

Loss on disposal of assets, net was $0.5 million and zero in the first nine months of fiscal years 2022 and 2021, respectively.

Selling, general and administrative costs and expenses were $16.8 million in the first nine months of fiscal year 2022 compared to $15.2 million in the first nine months of fiscal year 2021.

The 11% increase of $1.6 million primarily consisted of the following:

• Salaries, benefits and incentive compensation for the first nine months of fiscal year 2022 were $1.1 million higher than the same period of fiscal year 2021.

• Named executive officer severance for the first nine months of fiscal year 2022 was $0.8 million compared to zero in the same period of fiscal year 2021.

• Other selling, general and administrative expenses, including certain corporate overhead expenses, for the first nine months of fiscal year 2022 were $0.3 million lower than the same period of fiscal year 2021.

Depreciation and amortization expense for the first quarter of fiscal years 2023 and 2022 was $2.1 million and $2.2 million, respectively.

Other operations expenses were $1.2 million and $1.1 million in the first quarter of fiscal years 2023 and 2022, respectively.

Gain on disposal of assets, net was $39.7 million and $0.1 million in the first quarter of fiscal years 2023 and 2022, respectively.

The change is primarily related to sale of our Northern Properties in fiscal year 2023.

Selling, general and administrative costs and expenses were $9.3 million and $6.6 million in the first quarter of fiscal years 2023 and 2022, respectively.

The 41% increase of $2.7 million was primarily the result of:

• $2.0 million net increase in salaries, benefits and incentive compensation;

• $0.1 million increase in selling expenses;

• $0.6 million net increase in other selling, general and administrative expenses, primarily associated with our strategic initiatives.

Other (Expense) Income

Other expense in the first nine months of fiscal year 2022 was comprised primarily of $(1.2) million of net interest expense, partially offset by $0.7 million of equity in earnings of investments.

Other income in the first nine months of fiscal year 2021 was comprised primarily of $2.5 million of equity in earnings of investments, partially offset by $(0.8) million of net interest expense.

We recorded an estimated income tax provision of $1.4 million and $1.1 million in the first nine months of fiscal years 2022 and 2021 on pre-tax income of $3.7 million and $1.9 million, respectively.

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

Other (expense) income was $(3.5) million and $0.3 million in the first quarter of fiscal years 2023 and 2022, respectively.

The change of $3.8 million in other expense was primarily the result of:

• $1.4 million increase of interest expense, net as a result of a $1.6 million patronage dividend recorded in the first quarter of fiscal year 2022, compared to zero in fiscal year 2023;

• $2.6 million increase of other expense, net;

primarily as a result of pension settlement costs;

• $0.2 million increase of equity in earnings of investments.

We recorded an estimated income tax (provision) benefit of $(6.8) million and $2.7 million in the first quarter of fiscal years 2023 and 2022 on pre-tax income (loss) of $22.4 million and $(9.3) million, respectively.

The tax provision recorded for the first quarter of fiscal year 2023 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.

1 unchanged sentence

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.

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

Segment Results of Operations

4 unchanged sentences

Each segment is subject to review and evaluations related to current market conditions, market opportunities and available resources.

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

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

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 33,823 $ 6,337 $ — $ 12,578 $ 4,856 $ 57,594 $ 1,329 $ 58,923

Intersegment revenue — 9,696 (9,696) — — — — —

Total net revenues 33,823 16,033 (9,696) 12,578 4,856 57,594 1,329 58,923

Costs and expenses 32,600 11,953 (9,696) 3,154 1,280 39,291 6,103 45,394

Depreciation and amortization — — — — — 2,172 297 2,469

Operating income (loss) $ 1,223 $ 4,080 $ — $ 9,424 $ 3,576 $ 16,131 $ (5,071) $ 11,060

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

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 36,295 $ 4,540 $ — $ 4,073 $ 3,046 $ 47,954 $ 1,171 $ 49,125

Intersegment revenue — 7,192 (7,192) — — — — —

Total net revenues 36,295 11,732 (7,192) 4,073 3,046 47,954 1,171 49,125

Costs and expenses 31,846 9,279 (7,192) 2,708 1,956 38,597 4,717 43,314

Depreciation and amortization — — — — — 2,094 343 2,437

Operating income (loss) $ 4,449 $ 2,453 $ — $ 1,365 $ 1,090 $ 7,263 $ (3,889) $ 3,374

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 third quarter of fiscal years 2022 and 2021, our fresh lemons segment total net

revenues were $33.8 million and $36.3 million, respectively.

The 7% decrease of $2.5 million was primarily due to a net decrease in brokered fruit and other lemon sales of $6.3 million, partially offset by increased fresh lemon sales of $3.4 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 third quarter of fiscal years 2022 and 2021, our fresh lemons segment costs and expenses were $32.6 million and $31.8 million, respectively.

The 2% increase of $0.8 million primarily consisted of the following:

• Harvest costs for the third quarter of fiscal year 2022 were $2.2 million higher than the same period of fiscal year 2021.

• Growing costs for the third quarter of fiscal year 2022 were $1.7 million lower than the same period of fiscal year 2021.

• Third-party grower and supplier costs for the third quarter of fiscal year 2022 were $2.3 million lower than the same period of fiscal year 2021.

• Intersegment costs and expenses for the third quarter of fiscal year 2022 were $2.5 million higher than the same period of fiscal year 2021.

Lemon Packing

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

For the third quarter of fiscal years 2022 and 2021, our lemon packing segment total net revenues were $16.0 million and $11.7 million, respectively.

The 37% increase of $4.3 million was primarily due to increased volume of lemons packed and sold.

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 third quarter of fiscal years 2022 and 2021, our lemon packing costs and expenses were $12.0 million and $9.3 million, respectively.

The 29% increase of $2.7 million was primarily due to increased volume of lemons packed and sold.

For the third quarter of fiscal years 2022 and 2021, lemon packing segment operating income per carton sold was $2.70 and $2.14, respectively.

In the third quarter of fiscal years 2022 and 2021, the lemon packing segment included $9.7 million and $7.2 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 third quarter of fiscal year 2022 and 2021, our avocados segment had revenues of $12.6 million and $4.1 million, respectively.

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

For the third quarter of fiscal years 2022 and 2021, our avocados segment costs and expenses were $3.2 million and $2.7 million, respectively.

The increase of $0.4 million primarily consisted of the following:

• Harvest costs for the third quarter of fiscal year 2022 were $0.8 million higher than the same period of fiscal year 2021.

• Growing costs for the third quarter of fiscal year 2022 were $0.4 million lower than the same period of fiscal year 2021.

Other Agribusiness

For the third quarter of fiscal years 2022 and 2021, our other agribusiness segment total net revenues were $4.9 million and $3.0 million, respectively.

The 59% increase of $1.8 million primarily consisted of the following:

• Orange revenues for the third quarter of fiscal year 2022 were $1.8 million higher than the same period of fiscal year 2021.

• Specialty citrus and other crops revenues for the third quarter of fiscal year 2022 were $0.1 million higher than 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 third quarter of fiscal years 2022 and 2021, our other agribusiness costs and expenses were $1.3 million and $2.0 million, respectively.

The 35% decrease of $0.7 million primarily consisted of the following:

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

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

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

Corporate and Other

Our corporate and other operations had revenues of $1.3 million and $1.2 million for the third quarter of fiscal years 2022 and 2021, respectively.

Costs and expenses in our corporate and other operations for the third quarter of fiscal years 2022 and 2021 were approximately $6.1 million and $4.7 million, respectively, and include selling, general and administrative costs and expenses not allocated to the operating segments.

Depreciation and amortization expenses for the third quarter of fiscal years 2022 and 2021 were similar at $0.3 million.

Nine Months Ended July 31, 2022 Compared to the Nine Months Ended July 31, 2021

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

See Note 19 - Segment Information for additional information regarding our operating segments.

Three Months Ended January 31, 2023 Compared to the Three Months Ended January 31, 2022

The following table shows the segment results of operations for the three months ended January 31, 2023 (in thousands):

Packing Eliminations

6 unchanged sentences

Total net revenues 28,481 13,011 (7,363) — 2,399 36,528 1,373 37,901

Costs and expenses 91,983 34,171 (25,658) 5,548 7,718 113,762 19,665 133,427

Costs and expenses (gain) 33,300 11,353 (7,363) — 1,816 39,106 (29,536) 9,570

Depreciation and amortization — — — — — 2,135 312 2,447

Operating income (loss) $ (4,819) $ 1,658 $ — $ — $ 583 $ (4,713) $ 30,597 $ 25,884

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

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

Packing Eliminations

8 unchanged sentences

Depreciation and amortization — — — — — 2,185 295 2,480

Operating income (loss) $ 8,213 $ 9,015 $ — $ 2,639 $ 1,733 $ 15,009 $ (14,891) $ 118

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

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 first nine months of fiscal years 2022 and 2021, our fresh lemons segment total net revenues were $94.4 million and $98.2 million, respectively.

The 4% decrease of $3.8 million was primarily due to a decrease in brokered fruit and other lemon sales of $5.5 million, partially offset by increased fresh lemon sales of $1.7 million.

For the first quarter of fiscal years 2023 and 2022, our fresh lemons segment total net revenues were $28.5 million and $29.6 million, respectively.

The 4% decrease of $1.1 million was primarily the result of a net decrease in brokered fruit and other lemon sales.

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 nine months of fiscal years 2022 and 2021, our fresh lemons segment costs and expenses were $92.0 million and $90.0 million, respectively.

The 2% increase of $2.0 million primarily consisted of the following:

• Harvest costs for the first nine months of fiscal year 2022 were $2.6 million higher than the same period of fiscal year 2021.

• Growing costs for the first nine months of fiscal year 2022 were $2.0 million lower than the same period of fiscal year 2021.

• Third-party grower and supplier costs for the first nine months of fiscal year 2022 were $0.7 million lower than the same period of fiscal year 2021.

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

• Intersegment costs and expenses for the first nine months of fiscal year 2022 were $2.5 million higher than the same period of fiscal year 2021.

For the first quarter of fiscal years 2023 and 2022, our fresh lemons segment costs and expenses were $33.3 million and $32.2 million, respectively.

The 4% increase of $1.1 million was primarily the result of:

• Harvest costs for the first quarter of fiscal year 2023 were $1.1 million lower than the same period of fiscal year 2022.

• Growing costs for the first quarter of fiscal year 2023 were $1.1 million higher than the same period of fiscal year 2022.

• Third-party grower and supplier costs for the first quarter of fiscal year 2023 were $0.1 million higher than the same period of fiscal year 2022.

• Transportation costs for the first quarter of fiscal year 2023 were $0.3 million higher than the same period of fiscal year 2022.

• Intersegment costs and expenses for the first quarter of fiscal year 2023 were $0.8 million higher than the same period of fiscal year 2022.

Lemon Packing

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

For the first nine months of fiscal years 2022 and 2021, our lemon packing segment total net revenues were $44.7 million and $38.7 million, respectively.

The 16% increase of $6.0 million was primarily due to increased volume of lemons packed and sold.

For the first quarter of fiscal years 2023 and 2022, our lemon packing segment total net revenues were $13.0 million and $12.6 million, respectively.

The 4% increase of $0.5 million was primarily the result of increased volume of lemons packed and sold.

For the first nine months of fiscal years 2022 and 2021, our lemon packing costs and expenses were $34.2 million and $29.7 million, respectively.

The 15% increase of $4.5 million was primarily due to increased volume of lemons packed and sold.

For the first nine months of fiscal years 2022 and 2021, lemon packing segment operating income per carton sold was $2.47 and $2.26, respectively.

In the first nine months of fiscal years 2022 and 2021, the lemon packing segment included $25.7 million and $23.2 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

For the first quarter of fiscal years 2023 and 2022, our lemon packing costs and expenses were $11.4 million and $10.6 million, respectively.

The 8% increase of $0.8 million was primarily the result of increased volume of lemons packed and sold.

For the first quarter of fiscal years 2023 and 2022, lemon packing segment operating income per carton sold was $1.27 and $1.66, respectively.

In the first quarter of fiscal years 2023 and 2022, the lemon packing segment included $7.4 million and $6.6 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 nine months of fiscal years 2022 and 2021, our avocados segment had revenues of $16.9 million and $6.8 million, respectively.

For the first quarter of fiscal year 2023, our avocados segment had no revenue, compared to $0.8 million in the same period of fiscal year 2022.

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

For the first nine months of fiscal years 2022 and 2021, our avocados segment costs and expenses were $5.5 million and $4.1 million, respectively.

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

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

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

For the first quarter of fiscal years 2023 and 2022, our avocados segment costs and expenses were zero and $0.3 million, respectively.

Other Agribusiness

For the first nine months of fiscal years 2022 and 2021, our other agribusiness segment total net revenues were $10.7 million and $8.6 million, respectively.

The 24% increase of $2.1 million primarily consisted of the following:

• Orange revenues for the first nine months of fiscal year 2022 were $2.8 million higher than the same period of fiscal year 2021.

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

For the first quarter of fiscal years 2023 and 2022, our other agribusiness segment total net revenues were $2.4 million and $1.7 million, respectively.

The 37% increase of $0.7 million was primarily the result of:

• Orange revenues for the first quarter of fiscal year 2023 were $0.3 million higher than the same period of fiscal year 2022.

• Specialty citrus and other crops revenues for the first quarter of fiscal year 2023 were $0.4 million higher than the same period of fiscal year 2022.

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

For the first nine months of fiscal years 2022 and 2021, our other agribusiness costs and expenses were $7.7 million and $6.8 million, respectively.

The 13% increase of $0.9 million primarily consisted of the following:

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

• Growing costs for the first nine months of fiscal year 2022 were $0.5 million higher than the same period of fiscal year 2021.

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

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

For the first quarter of fiscal years 2023 and 2022, our other agribusiness costs and expenses were $1.8 million and $2.6 million, respectively.

The 30% decrease of $0.8 million was primarily the result of:

• Harvest costs for the first quarter of fiscal year 2023 were $0.1 million lower than the same period of fiscal year 2022.

• Growing costs for the first quarter of fiscal year 2023 were $1.4 million lower than the same period of fiscal year 2022.

• Purchased fruit costs for the first quarter of fiscal year 2023 were $0.7 million higher than the same period of fiscal year 2022.

Total agribusiness depreciation and amortization expenses for the first quarter of fiscal years 2023 and 2022 were similar at $2.1 million.

Corporate and Other

Our corporate and other operations had revenues of $3.9 million and $3.5 million for the first nine months of fiscal years 2022 and 2021, respectively.

Costs and expenses in our corporate and other operations for the first nine months of fiscal years 2022 and 2021 were approximately $19.7 million and $17.4 million, respectively, and include selling, general and administrative costs and expenses not allocated to the operating segments.

Depreciation and amortization expenses for the first nine months of fiscal years 2022 and 2021 were similar at $0.9 million.

Our corporate and other operations had revenues of $1.4 million and $1.2 million for the first quarter of fiscal years 2023 and 2022, respectively.

Costs and expenses in our corporate and other operations for the first quarter of fiscal years 2023 and 2022 were approximately $(29.5) million and $7.4 million, respectively, and include selling, general and administrative costs and expenses and gain on disposal of assets not allocated to the operating segments.

Depreciation and amortization expenses for the first quarter of fiscal years 2023 and 2022 were similar at $0.3 million.

Seasonal Operations

3 unchanged sentences

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 July 31, 2022 and 2021

Results of Operations for the Trailing Twelve Months Ended January 31, 2023 and 2022

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

Trailing Twelve Months Ended July 31,

Trailing Twelve Months Ended January 31,

Net revenues:

5 unchanged sentences

Other operations 4,602 4,324

Loss on disposal of assets, net 612 502

(Gain) loss on disposal of assets (44,157) 24

Selling, general and administrative 24,496 20,130

Total costs and expenses 145,589 177,276

Operating loss (2,362) (9,405)

Operating income (loss) 37,643 (10,250)

Other (expense) income:

2 unchanged sentences

Equity in earnings of investments, net 1,543 2,888

Other income, net 112 56

Other (expense) income, net (3,582) 111

Total other (expense) income (5,677) 1,936

Loss before income tax benefit (2,375) (8,260)

Income tax benefit 3 1,496

Net loss (2,372) (6,764)

(Income) loss attributable to noncontrolling interest (78) 760

Net loss attributable to Limoneira Company $ (2,450) $ (6,004)

Income (loss) before income tax (provision) benefit 31,966 (8,314)

Income tax (provision) benefit (10,300) 1,729

Net income (loss) 21,666 (6,585)

Loss attributable to noncontrolling interest 247 836

Net income (loss) attributable to Limoneira Company $ 21,913 $ (5,749)

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

• Total revenues increased $16.1 million in the twelve months ended July 31, 2022 compared to the twelve months ended July 31, 2021, primarily due to increased agribusiness revenues, particularly increased avocado sales.

• Total costs and expenses increased $9.1 million in the twelve months ended July 31, 2022 compared to the twelve months ended July 31, 2021, primarily due to increases in our agribusiness costs.

• Total other income decreased $1.2 million in the twelve months ended July 31, 2022 compared to the twelve months ended July 31, 2021, primarily due to decreased equity in earnings of investments.

• Income tax benefit decreased $1.5 million in the twelve months ended July 31, 2022 compared to the twelve months ended July 31, 2021, primarily due to the decrease in pre-tax loss of $5.9 million.

• Total revenues increased $16.2 million in the twelve months ended January 31, 2023, compared to the twelve months ended January 31, 2022, primarily related to increased agribusiness revenues, particularly increased avocado sales, oranges and specialty crops.

• Total costs and expenses decreased $31.7 million in the twelve months ended January 31, 2023, compared to the twelve months ended January 31, 2022, primarily related to gain on disposal of assets, partially offset by increased agribusiness costs and selling, general and administrative expenses.

• Total other expense increased $7.6 million in the twelve months ended January 31, 2023, compared to the twelve months ended January 31, 2022, primarily related to increased interest expense, net of patronage dividends, decreased equity in earnings of investments and increased other expense primarily due to pension settlement costs.

• Income tax provision increased $12.0 million in the twelve months ended January 31, 2023, compared to the twelve months ended January 31, 2022, primarily related to an increase in pre-tax income of $40.3 million.

Liquidity and Capital Resources

4 unchanged sentences

Raw materials needed to propagate the various crops grown by us consist primarily of fertilizer, herbicides, insecticides, fuel and water, all of which are readily available from local sources.

Material contractual obligations arising in the normal course of business primarily consist of purchase obligations, long-term fixed rate and variable rate debt and related interest payments, operating and finance leases and our noncontributory, defined benefit pension plan (“the Plan”).

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

The liabilities disclosed as of July 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 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 July 31, 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.

Material contractual obligations arising in the normal course of business consist primarily of purchase obligations, long-term fixed rate and variable rate debt and related interest payments and operating and finance leases.

See Note 10 - Long-Term Debt and Note 12 - Leases for amounts outstanding as of January 31, 2023, related to debt and leases.

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

We believe that the cash flows from operations and available borrowing capacity from our existing credit facilities will be sufficient to satisfy our capital expenditures, debt service, working capital needs and other contractual obligations for the next twelve months.

1 unchanged sentence

Cash Flows from Operating Activities

For the nine months ended July 31, 2022, net cash provided by operating activities was $10.9 million, compared to net cash provided by operating activities of $16.8 million for the nine months ended July 31, 2021.

The significant components of our cash flows provided by operating activities were as follows:

• Net income for the nine months ended July 31, 2022 and 2021 was $2.3 million and $0.8 million, respectively.

The components of net income in the nine months ended July 31, 2022, compared to the net income in the same period in fiscal year 2021 consist of an increase in operating income of $4.0 million, a decrease in total other income of $2.2 million and an increase in income tax expense of $0.3 million.

• Adjustments to reconcile net income to net cash provided by operating activities:

◦ Adjustments provided $11.9 million and $8.7 million in the nine months ended July 31, 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 $(3.3) million and $7.3 million of operating cash in the nine months ended July 31, 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.

For the three months ended January 31, 2023, net cash used in operating activities was $21.2 million, compared to net cash used in operating activities of $8.2 million for the three months ended January 31, 2022.

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

• Net income (loss) for the three months ended January 31, 2023 and 2022 was $15.5 million and $(6.6) million, respectively.

The components of net income in the three months ended January 31, 2023, compared to the net loss in the same period in fiscal year 2022 consist of an increase in operating income of $35.4 million, an increase in total other expense of $3.8 million and an increase in income tax provision of $9.5 million.

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

◦ Adjustments used $29.1 million and provided $1.1 million in the three months ended January 31, 2023 and 2022, respectively, primarily related to gain on disposal of assets, depreciation and amortization, stock compensation expense and deferred income taxes.

◦ Changes in operating assets and liabilities used $7.6 million and $2.6 million of operating cash in the three months ended January 31, 2023 and 2022, respectively, primarily related to accounts receivables/other from related parties, cultural costs, prepaid expenses and other current assets, accounts payable and growers and suppliers payable.

Cash Flows from Investing Activities

For the nine months ended July 31, 2022 and 2021, net cash used in investing activities was $5.3 million and $8.7 million, respectively.

• Capital expenditures were $7.7 million in the nine months ended July 31, 2022, comprised of $7.3 million for property, plant and equipment primarily related to orchard development and $0.4 million for real estate development projects.

• Capital expenditures were $8.3 million in the nine months ended July 31, 2021, comprised of $8.0 million for property, plant and equipment primarily related to orchard and vineyard development and $0.3 million for real estate development projects.

For the three months ended January 31, 2023 and 2022, net cash provided by (used in) investing activities was $99.1 million and $(0.7) million, respectively.

• The $99.1 million of cash provided by investing activities during the three months ended January 31, 2023 was comprised primarily of net proceeds from sales of assets of $98.9 million, net proceeds from the sale of real estate development assets of $2.6 million, partially offset by capital expenditures of $2.2 million, primarily related to orchard and vineyard development.

• The $0.7 million of cash used in investing activities during the three months ended January 31, 2022 was comprised primarily of capital expenditures of $2.1 million primarily related to orchard and vineyard development, partially offset by net proceeds from sales of assets of $1.1 million.

Cash Flows from Financing Activities

For the nine months ended July 31, 2022 and 2021, net cash used in financing activities was $4.8 million and $7.8 million, respectively.

• The $4.8 million of cash used in financing activities during the nine months ended July 31, 2022 was primarily comprised of common and preferred dividends, in aggregate, of $4.4 million, the exchange of common stock of $1.1 million and proceeds from equipment financings of $1.0 million.

• The $7.8 million of cash used in financing activities during the nine months ended July 31, 2021 was primarily comprised of net repayments of long-term debt in the amount of $2.8 million and common and preferred dividends, in aggregate, of $4.4 million.

For the three months ended January 31, 2023 and 2022, net cash (used in) provided by financing activities was $(66.3) million and $9.3 million, respectively.

• The $66.3 million of cash used in financing activities during the three months ended January 31, 2023 was comprised primarily of net repayments of long-term debt of $64.8 million and common and preferred stock dividends of $1.5 million.

• The $9.3 million of cash provided by financing activities during the three months ended January 31, 2022 was comprised primarily of net borrowings of long-term debt 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.

Transactions Affecting Liquidity and Capital Resources

Credit Facilities and Long-Term Debt

We finance our working capital and other liquidity requirements primarily through cash from operations and our Farm Credit West Credit Facility, which includes the MLA, Supplements and Revolving Equity Line of Credit (the "RELOC").

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 - 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.

We finance our working capital and other liquidity requirements primarily through cash from operations and from our AgWest Farm Credit Facility, which includes the Master Loan Agreement (the "MLA"), Supplements and Revolving Equity Line of Credit (the "RELOC").

In addition, we have Banco de Chile term loans and COVID-19 loans.

Additional information regarding these loans can be found in Note 10 - Long-Term Debt.

In June 2021, we entered into the MLA with AgWest Farm Credit, formerly known as Farm Credit West, PCA (the "Lender"), together with the Supplements and a Fixed Interest Rate Agreement, which extends the principal repayment to July 1, 2026.

The MLA governs the terms of the Supplements.

The MLA amends and restates the previous Master Loan Agreement between us and the Lender, dated June 19, 2017, and extends the principal repayment to July 1, 2026.

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 July 31, 2022, our outstanding borrowings under the Farm Credit West Credit Facility and RELOC were $113.0 million and we had $17.0 million of availability.

As of January 31, 2023, our outstanding borrowings under the AgWest Farm Credit Facility and RELOC were $40.0 million and we had $90.0 million of availability.

On January 31, 2023, the Company sold the Northern Properties which resulted in total net proceeds of $98.8 million.

The proceeds were used to pay down all of the Company's domestic debt except the Non-Revolving Credit Supplement.

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.

We are also subject to a financial covenant that requires us to maintain compliance with a specified debt service coverage ratio on an annual basis.

In December 2021, the Lender modified the covenant to defer measurement at October 31, 2021 and revert to a debt service coverage ratio of 1.25:1.0 measured as of October 31, 2022.

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, respectively.

Treasury Stock

In fiscal year 2021, our Company's Board of Directors approved a share repurchase program authorizing us to repurchase up to $10.0 million of our outstanding shares of common stock through September 2022.

No shares have been repurchased under this program.

We are also subject to a financial covenant that requires us to maintain compliance with a specified debt service coverage ratio greater than or equal to 1:25:1.0 on an annual basis.

We were in compliance as of October 31, 2022.

In February 2023, the Lender declared an annual cash patronage dividend of 1.25% of average eligible loan balances and the Company received $1.4 million in the second quarter of fiscal year 2023.

In the first quarter of fiscal year 2022, the Lender declared an annual patronage dividend of $1.6 million, which we received in the second quarter of fiscal year 2022.

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 $0.4 million in the nine months ended July 31, 2022 and 2021, respectively.

Cash dividends declared in the nine months ended July 31, 2022 and 2021 were $0.23 per common share and such dividends paid were $4.0 million in the nine months ended July 31, 2022 and 2021.

Off-Balance Sheet Arrangements

As discussed in Note 7 – Real Estate Development and Note 8 – Equity in Investments of the notes to consolidated financial statements included in our fiscal year 2021 Annual Report on Form 10-K, we have investments in joint ventures and partnerships that are accounted for using the equity method of accounting.

Such preferred dividends paid were $0.1 million in the three months ended January 31, 2023 and 2022.

Cash dividends declared in the three months ended January 31, 2023 and 2022 were $0.08 per common share and such dividends paid were $1.3 million in the three months ended January 31, 2023 and 2022.

Critical Accounting Estimates

2 unchanged sentences

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 nine months ended July 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 three months ended January 31, 2023, our critical accounting policies and estimates have not changed since the filing of our Annual Report on Form 10-K as of October 31, 2022.

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

Recent Accounting Pronouncements

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

Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in the disclosures discussed in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended October 31, 2021 as filed with the SEC on January 10, 2022.

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