What changed in this filing

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Item 1. Financial Statements

2023-06-06 compared with 2023-03-09 · 260 added, 168 removed, 500 unchanged (46% of the section changed)

3 unchanged sentences

($ in thousands, except share amounts)

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Current assets:

28 unchanged sentences

Series B Convertible Preferred Stock – $ 100.00 par value ( 50,000 shares authorized:

14,790 shares issued and outstanding at January 31, 2023 and October 31, 2022) ( 8.75 % coupon rate)

14,790 shares issued and outstanding at April 30, 2023 and October 31, 2022) ( 8.75 % coupon rate)

Series B-2 Convertible Preferred Stock – $ 100.00 par value ( 10,000 shares authorized:

9,300 shares issued and outstanding at January 31, 2023 and October 31, 2022) ( 4 % dividend rate on liquidation value of $ 1,000 per share)

9,300 shares issued and outstanding at April 30, 2023 and October 31, 2022) ( 4 % dividend rate on liquidation value of $ 1,000 per share)

Stockholders' Equity:

Series A Junior Participating Preferred Stock – $ 0.01 par value ( 20,000 shares authorized:

zero issued or outstanding at January 31, 2023 and October 31, 2022)

zero issued or outstanding at April 30, 2023 and October 31, 2022)

Common Stock – $ 0.01 par value ( 39,000,000 shares authorized:

18,081,581 and 17,935,292 shares issued and 17,830,604 and 17,684,315 shares outstanding at January 31, 2023 and October 31, 2022, respectively)

18,229,887 and 17,935,292 shares issued and 17,978,910 and 17,684,315 shares outstanding at April 30, 2023 and October 31, 2022, respectively)

Additional paid-in capital 167,169 165,169

1 unchanged sentence

Accumulated other comprehensive loss ( 4,011 ) ( 7,908 )

Treasury stock, at cost, 250,977 shares at January 31, 2023 and October 31, 2022

Treasury stock, at cost, 250,977 shares at April 30, 2023 and October 31, 2022

( 3,493 ) ( 3,493 )

7 unchanged sentences

Three Months Ended

April 30, Six Months Ended

2023 2022 2023 2022

Net revenues:

5 unchanged sentences

Other operations 1,009 1,093 2,247 2,167

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

Loss (gain) on disposal of assets, net 8,998 346 ( 30,744 ) 261

Gain on legal settlement ( 2,269 ) — ( 2,269 ) —

Selling, general and administrative 6,005 5,126 15,285 11,725

Total costs and expenses 51,932 44,164 63,949 92,996

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

Other (expense) income:

Operating (loss) income ( 3,862 ) 2,586 22,022 ( 6,972 )

Other income (expense):

Interest income 62 27 70 48

1 unchanged sentence

Equity in earnings of investments, net 62 299 315 350

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

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

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

Other income (expense), net 200 78 ( 2,412 ) 93

Total other income (expense) 1,320 ( 292 ) ( 2,203 ) 10

(Loss) income before income tax benefit (provision) ( 2,542 ) 2,294 19,819 ( 6,962 )

Income tax benefit (provision) 912 ( 722 ) ( 5,915 ) 1,928

Net (loss) income ( 1,630 ) 1,572 13,904 ( 5,034 )

Net loss (income) attributable to noncontrolling interest 17 ( 11 ) 114 77

Net (loss) income attributable to Limoneira Company ( 1,613 ) 1,561 14,018 ( 4,957 )

Preferred dividends ( 126 ) ( 126 ) ( 251 ) ( 251 )

Net income (loss) applicable to common stock $ 15,506 $ ( 6,643 )

Basic net income (loss) per common share $ 0.87 $ ( 0.38 )

Diluted net income (loss) per common share $ 0.84 $ ( 0.38 )

Net (loss) income applicable to common stock $ ( 1,739 ) $ 1,435 $ 13,767 $ ( 5,208 )

Basic net (loss) income per common share $ ( 0.10 ) $ 0.08 $ 0.77 $ ( 0.30 )

Diluted net (loss) income per common share $ ( 0.10 ) $ 0.08 $ 0.75 $ ( 0.30 )

Weighted-average common shares outstanding-basic 17,597,000 17,511,000 17,587,000 17,461,000

2 unchanged sentences

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(In thousands)

Three Months Ended

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

Other comprehensive income, net of tax:

April 30, Six Months Ended

2023 2022 2023 2022

Net (loss) income $ ( 1,630 ) $ 1,572 $ 13,904 $ ( 5,034 )

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments ( 50 ) ( 1,006 ) 2,173 ( 951 )

Minimum pension liability adjustment, net of tax of $( 135 ) and $ 27 for the three months ended January 31, 2023 and 2022, respectively.

Pension settlement, net of tax of $ 756 and $ 0 for the three months ended January 31, 2023 and 2022, respectively.

Total other comprehensive income, net of tax 3,947 127

Comprehensive income (loss) 19,481 ( 6,479 )

Comprehensive loss attributable to noncontrolling interest 97 86

Comprehensive income (loss) attributable to Limoneira Company $ 19,578 $ ( 6,393 )

Minimum pension liability adjustments, net of tax of $ 0 , $ 27 , $( 135 ) and $ 54 for the three and six months ended April 30, 2023 and 2022, respectively

— 73 ( 220 ) 145

Pension settlement cost, net of tax of $ 0 and $ 756 for the three and six months ended April 30, 2023

Total other comprehensive (loss) income, net of tax ( 50 ) ( 933 ) 3,897 ( 806 )

Comprehensive (loss) income ( 1,680 ) 639 17,801 ( 5,840 )

Comprehensive loss (income) attributable to noncontrolling interest 17 ( 5 ) 114 81

Comprehensive (loss) income attributable to Limoneira Company $ ( 1,663 ) $ 634 $ 17,915 $ ( 5,759 )

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND TEMPORARY EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND TEMPORARY EQUITY (UNAUDITED)

($ in thousands)

17 unchanged sentences

Balance at January 31, 2023 17,830,604 $ 178 $ 166,232 $ 29,669 $ ( 3,961 ) $ ( 3,493 ) $ 11,434 $ 200,059 $ 1,479 $ 9,331

Dividends Common ($ 0.075 per share)

— — — ( 1,348 ) — — — ( 1,348 ) — —

Dividends Series B ($ 2.19 per share)

— — — ( 33 ) — — — ( 33 ) — —

Dividends Series B-2 ($ 10 per share)

— — — ( 93 ) — — — ( 93 ) — —

Stock compensation 149,900 2 963 — — — — 965 — —

Exchange of common stock ( 1,594 ) — ( 26 ) — — — — ( 26 ) — —

Net loss — — — ( 1,613 ) — — ( 17 ) ( 1,630 ) — —

Other comprehensive loss, net of tax — — — — ( 50 ) — — ( 50 ) — —

Balance at April 30, 2023 17,978,910 $ 180 $ 167,169 $ 26,582 $ ( 4,011 ) $ ( 3,493 ) $ 11,417 $ 197,844 $ 1,479 $ 9,331

Stockholders' Equity Temporary Equity

16 unchanged sentences

Balance at January 31, 2022 17,700,038 $ 180 $ 164,061 $ 13,581 $ ( 5,606 ) $ ( 3,493 ) $ 11,879 $ 180,602 $ 1,479 $ 9,331

Dividends Common ($ 0.075 per share)

— — — ( 1,325 ) — — — ( 1,325 ) — —

Dividends Series B ($ 2.19 per share)

— — — ( 33 ) — — — ( 33 ) — —

Dividends Series B-2 ($ 10 per share)

— — — ( 93 ) — — — ( 93 ) — —

Stock compensation 34,231 — 378 — — — — 378 — —

Exchange of common stock ( 12,718 ) — ( 186 ) — — — — ( 186 ) — —

Net income — — — 1,561 — — 11 1,572 — —

Other comprehensive loss, net of tax — — — — ( 933 ) — ( 6 ) ( 939 ) — —

Balance at April 30, 2022 17,721,551 $ 180 $ 164,253 $ 13,691 $ ( 6,539 ) $ ( 3,493 ) $ 11,884 $ 179,976 $ 1,479 $ 9,331

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Operating activities

2 unchanged sentences

Depreciation and amortization 4,491 4,963

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

(Gain) loss on disposal of assets, net ( 30,744 ) 261

Gain on legal settlement ( 853 ) —

Stock compensation expense 2,029 1,375

1 unchanged sentence

Equity in earnings of investments, net ( 315 ) ( 350 )

Cash distributions from equity investments — 132

Deferred income taxes 5,915 ( 1,928 )

4 unchanged sentences

Prepaid expenses and other current assets ( 5,105 ) ( 2,392 )

Income taxes payable ( 330 ) —

Other assets 21 33

8 unchanged sentences

Cash distribution from Trapani Fresh 82 —

Collection on notes receivable — 250

Collection on note receivable — 2,600

Equity investment contributions ( 275 ) —

16 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Supplemental disclosures of cash flow information

Cash paid during the period for interest (net of amounts capitalized) $ 397 $ 431

Cash paid during the period for income taxes $ 330 $ —

Non-cash investing and financing activities:

20 unchanged sentences

Summary of Significant Accounting Policies

Comprehensive Income (Loss)

Comprehensive income (loss) represents all changes in a company’s net assets, except changes resulting from transactions with stockholders.

Other comprehensive income includes foreign currency translation items and defined benefit pension items.

Comprehensive (Loss) Income

Comprehensive (loss) income represents all changes in a company’s net assets, except changes resulting from transactions with stockholders.

Other comprehensive income or loss includes foreign currency translation items and defined benefit pension items.

Accumulated other comprehensive loss is reported as a component of the Company's stockholders' equity.

The following table summarizes other comprehensive income by component (in thousands):

Three Months Ended January 31,

Pre-tax Amount Tax Benefit (Expense) Net Amount Pre-tax Amount Tax Expense Net Amount

The following table summarizes other comprehensive (loss) income by component (in thousands):

Three Months Ended April 30,

Pre-tax Amount Tax Expense Net Amount Pre-tax Amount Tax Expense Net Amount

Foreign currency translation adjustments $ ( 50 ) $ — $ ( 50 ) $ ( 1,006 ) $ — $ ( 1,006 )

Minimum pension liability adjustments:

Other comprehensive (loss) income before reclassifications ( 355 ) 135 ( 220 ) 99 ( 27 ) 72

Amounts reclassified to earnings included in "Other (expense) income, net" 2,700 ( 756 ) 1,944 — — —

Other comprehensive income $ 4,568 $ ( 621 ) $ 3,947 $ 154 $ ( 27 ) $ 127

Other comprehensive income before reclassifications — — — 100 ( 27 ) 73

Other comprehensive loss $ ( 50 ) $ — $ ( 50 ) $ ( 906 ) $ ( 27 ) $ ( 933 )

LIMONEIRA COMPANY

1 unchanged sentence

Summary of Significant Accounting Policies (continued)

Six Months Ended April 30,

Pre-tax Amount Tax Benefit (Expense) Net Amount Pre-tax Amount Tax Expense Net Amount

Foreign currency translation adjustments $ 2,173 $ — $ 2,173 $ ( 951 ) $ — $ ( 951 )

Minimum pension liability adjustments:

Other comprehensive (loss) income before reclassifications ( 355 ) 135 ( 220 ) 199 ( 54 ) 145

Amounts reclassified to earnings included in "Other income (expense), net" 2,700 ( 756 ) 1,944 — — —

Other comprehensive income (loss) $ 4,518 $ ( 621 ) $ 3,897 $ ( 752 ) $ ( 54 ) $ ( 806 )

The following table summarizes the changes in accumulated other comprehensive loss by component (in thousands):

Foreign Currency Translation (Loss) Gain Defined Benefit Pension Plan Accumulated Other Comprehensive Loss (Income)

Foreign Currency Translation (Loss) Gain Defined Benefit Pension Plan Accumulated Other Comprehensive Loss

Balance at October 31, 2022 $ ( 6,184 ) $ ( 1,724 ) $ ( 7,908 )

Other comprehensive income 2,173 1,724 3,897

Balance at January 31, 2023 $ ( 3,961 ) $ — $ ( 3,961 )

Foreign Currency Translation (Loss) Gain Defined Benefit Pension Plan Accumulated Other Comprehensive Loss (Income)

Balance at April 30, 2023 $ ( 4,011 ) $ — $ ( 4,011 )

Foreign Currency Translation Loss Defined Benefit Pension Plan Accumulated Other Comprehensive Loss

Balance at October 31, 2021 $ ( 3,754 ) $ ( 1,979 ) $ ( 5,733 )

Other comprehensive income 55 72 127

Balance at January 31, 2022 $ ( 3,699 ) $ ( 1,907 ) $ ( 5,606 )

Other comprehensive (loss) income ( 951 ) 145 ( 806 )

Balance at April 30, 2022 $ ( 4,705 ) $ ( 1,834 ) $ ( 6,539 )

COVID-19 Pandemic

There is continued uncertainty around the breadth and duration of the Company's business disruptions related to the COVID-19 pandemic.

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

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

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

The COVID-19 pandemic may continue to impact the Company's 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.

The full impact of the COVID-19 pandemic on the Company's results of operations, financial condition, and liquidity, including its ability to comply with debt covenants, for fiscal year 2023 and beyond, is driven by estimates that contain uncertainties.

Concentrations and Geographic Information

Concentrations

Concentrations of credit risk with respect to revenues and accounts receivable are limited due to a large, diverse customer base.

One customer represented 13 % of revenue for the three months ended January 31, 2023.

Two individual customers represented 15 % and 12 % of revenue, respectively, for the three months ended January 31, 2022.

One individual customer represented 11 % of accounts receivable, net as of January 31, 2023.

No individual customer represented more than 10% of accounts receivable, net as of October 31, 2022.

One individual supplier represented 13 % of accounts payable as of January 31, 2023.

No individual supplier represented more than 10% of accounts payable as of October 31, 2022.

Lemons procured from third-party growers were 66 % and 57 % of the Company's lemon supply for the three months ended January 31, 2023 and 2022, respectively.

One third-party grower was 17 % and 20 % of the lemon supply for the three months ended January 31, 2023 and 2022, respectively.

One individual customer represented 12 % of revenue for the six months ended April 30, 2023.

One individual customer represented 10 % of accounts receivable, net as of April 30, 2023.

One individual supplier represented 11 % of accounts payable as of April 30, 2023.

Lemons procured from third-party growers were 57 % and 54 % of the Company's lemon supply for the six months ended April 30, 2023 and 2022, respectively.

Two third-party growers were 23 % and 19 % of the lemon supply for the six months ended April 30, 2023, respectively.

One third-party grower was 13 % of the lemon supply for the six months ended April 30, 2022.

The Company maintains its cash in federally insured financial institutions.

The account balances at these institutions periodically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of risk related to amounts on deposit in excess of FDIC insurance coverage.

During the three months ended January 31, 2023 and 2022, the Company had approximately $ 252,000 and $ 208,000 , respectively, of total sales in Chile by Fruticola Pan de Azucar S.A.

("PDA") and Agricola San Pablo SpA ("San Pablo") and approximately $ 74,000 and $ 147,000 , respectively, of total sales in Argentina by Trapani Fresh Consorcio de Cooperacion ("Trapani Fresh").

Aggregate foreign exchange transaction losses realized for our foreign subsidiaries was approximately $ 58,000 for the three months ended January 31, 2023 and was included in selling, general and administrative expenses in the consolidated statements of operations.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Asset Sales and Disposals

Northern Properties

In October 2022, the Company 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 $ 100,405,000 .

On January 25, 2023, the Board approved the Agreement creating a binding agreement of the Company to sell the Northern Properties and the transaction closed on January 31, 2023.

During the quarter ended April 30, 2023, the purchase price was decreased by $ 397,000 for reimbursement of certain cultural costs and prepaid expenses, resulting in a final purchase price of $ 100,008,000 .

The following is a summary of the transaction (in thousands):

January 31, 2023

Net cash proceeds received $ 85,494

3 unchanged sentences

Cultural costs 3,853

Prepaid expenses and other current assets 155

Property, plant and equipment, net 53,144

4 unchanged sentences

The proceeds were used to pay down all of the Company’s domestic debt except the AgWest Farm Credit $ 40,000,000 non-revolving line of credit.

The Northern Properties component, including an allocation of interest expense related to the debt directly repaid through the transaction, had a pretax loss of $ 1,667,000 and $ 2,720,000 for the three months ended January 31, 2023 and 2022, respectively.

The Northern Properties component, including an allocation of interest expense related to the debt directly repaid through the transaction, had a pretax loss of $ 1,677,000 and $ 1,423,000 for the six months ended April 30, 2023 and 2022, respectively.

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

1 unchanged sentence

Further, on January 31, 2023, the Company 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.

In April 2023, the Company determined that citrus farming operations were economically unviable on 670 acres of leased agricultural land at the Cadiz Ranch.

As a result, the Company ceased farming operations, disposed of the related property, plant and equipment and recorded a loss on disposal of assets of $ 9,012,000 as of April 30, 2023.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Prepaid supplies and insurance $ 2,638 $ 2,958

2 unchanged sentences

Lemon supplier advances 1,434 1,188

Legal settlement receivable 6,109 —

Other 1,146 1,205

$ 11,749 $ 8,496

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Real Estate Development

Real estate development assets are comprised primarily of land and land development costs for the East Area II property in the amount of $ 9,849,000 and $ 9,706,000 at January 31, 2023 and October 31, 2022, respectively.

Real estate development assets are comprised primarily of land and land development costs for the East Area II property in the amount of $ 9,858,000 and $ 9,706,000 at April 30, 2023 and October 31, 2022, respectively.

East Area I, Retained Property and East Area II

2 unchanged sentences

To consummate the transaction, the Company formed Limoneira Lewis Community Builders, LLC (“LLCB”) as the development entity, contributed its East Area I property to LLCB and sold a 50 % interest to Lewis for $ 20,000,000 .

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Real Estate Development (continued)

East Area I, Retained Property and East Area II (continued)

The Company and LLCB also entered into a Retained Property Development Agreement on the Transaction Date (the "Retained Property Agreement").

Under the terms of the Retained Property Agreement, LLCB transferred certain contributed East Area I property, which is entitled for commercial development, back to the Company (the "Retained Property") and arranged for the design and construction of certain improvements to the Retained Property, subject to certain reimbursements by the Company.

The balance in East Area II includes estimated costs incurred by and reimbursable to LLCB of $ 3,444,000 at January 31, 2023 and October 31, 2022, which is included in payables to related parties.

The balance in East Area II includes estimated costs incurred by and reimbursable to LLCB of $ 3,444,000 at April 30, 2023 and October 31, 2022, which is included in payables to related parties.

In January 2018, LLCB entered into a $ 45,000,000 unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A.

3 unchanged sentences

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

The Loan had an outstanding balance of $ 9,800,000 as of January 31, 2023.

The Loan had an outstanding balance of $ 13,100,000 as of April 30, 2023.

In February 2018, the Company and certain principals from Lewis guaranteed the obligations under the Loan.

5 unchanged sentences

The Company formed LLCB II, LLC ("LLCB II") as the development entity, contributed the Retained Property to the joint venture and sold a 50 % interest to Lewis for $ 7,975,000 .

The Company recorded a deferred gain of $ 465,000 on the transaction which is included in other long-term liabilities as of January 31, 2023 and October 31, 2022.

The Company recorded a deferred gain of $ 465,000 on the transaction, which is included in other long-term liabilities as of April 30, 2023 and October 31, 2022.

The joint venture partners will share in the capital contributions to fund project costs until loan proceeds and/or revenues are sufficient to fund the project.

The Company made contributions of $ 275,000 to LLCB II during the three months ended January 31, 2023.

Through January 31, 2023, LLCB has closed sales of initial residential lots representing 586 residential units.

The Company made contributions of $ 275,000 to LLCB II during the six months ended April 30, 2023.

Through April 30, 2023, LLCB has closed sales of initial residential lots representing 586 residential units.

Real Estate Development (continued)

Other Real Estate Development Projects

In fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $ 2,700,000 , which closed in November 2022.

After transaction and other costs, the Company received cash proceeds of approximately $ 2,577,000 and recorded an immaterial loss on disposal of assets during the three months ended January 31, 2023.

After transaction and other costs, the Company received cash proceeds of approximately $ 2,577,000 and recorded an immaterial loss on disposal of assets during the six months ended April 30, 2023.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Equity in Investments

Equity in investments consist of the following (in thousands):

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Limoneira Lewis Community Builders, LLC $ 61,409 $ 61,154

4 unchanged sentences

$ 73,445 $ 72,855

Net amounts due from Rosales were $ 430,000 and $ 270,000 at January 31, 2023 and October 31, 2022, respectively, and are included in receivables/other from related parties and payables to related parties.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Equity in Investments (continued)

Net amounts due from Rosales were $ 442,000 and $ 270,000 at April 30, 2023 and October 31, 2022, respectively, and are included in receivables/other from related parties and payables to related parties.

Unconsolidated Significant Subsidiary

2 unchanged sentences

Summarized income statement information of an equity method investee is required in an interim report if either of the two tests exceed 20% in the interim periods presented.

During the year-to-date interim periods for the three months ended January 31, 2023 and 2022, this threshold was not met for any of the Company's equity investments.

During the year-to-date interim periods for the six months ended April 30, 2023 and 2022, this threshold was not met for any of the Company's equity investments.

Goodwill and Intangible Assets, Net

3 unchanged sentences

Foreign currency translation adjustment 23

Balance at January 31, 2023 $ 1,529

Balance at April 30, 2023 $ 1,529

Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable.

There have been no impairment charges recorded against goodwill as of January 31, 2023.

There have been no impairment charges recorded against goodwill as of April 30, 2023.

Intangible assets consisted of the following (in thousands):

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life in Years Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life in Years

4 unchanged sentences

$ 10,230 $ ( 2,992 ) $ 7,238 $ 9,934 $ ( 2,617 ) $ 7,317

Amortization expense totaled $ 197,000 and $ 181,000 for the three months ended January 31, 2023 and 2022, respectively.

Estimated future amortization expense of intangible assets as of January 31, 2023 is as follows (in thousands):

2023 (excluding the three months ended January 31, 2023) $ 532

Thereafter 676

Goodwill and Intangible Assets, Net (continued)

Amortization expense totaled $ 178,000 and $ 180,000 for the three months ended April 30, 2023 and 2022, respectively.

Amortization expense totaled $ 375,000 and $ 361,000 for the six months ended April 30, 2023 and 2022 respectively.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Estimated future amortization expense of intangible assets as of April 30, 2023 is as follows (in thousands):

2023 (remaining six months) $ 354

Thereafter 676

Investments in Mutual Water Companies

The Company’s investments in various not-for-profit mutual water companies provide it with the right to receive a proportionate share of water from each of the not-for-profit mutual water companies that have been invested in and do not constitute voting shares and/or rights.

In January 2023, the Company sold an investment in a mutual water company with a net book value of $ 1,320,000 as part of the Northern Properties sale described in Note 3.

As of January 31, 2023 and October 31, 2022, $ 5,191,000 and $ 6,500,000 , respectively, were included in other assets.

In January 2023, the Company sold an investment in a mutual water company with a net book value of $ 1,320,000 as part of the Northern Properties sale described in Note 3 - Asset Sales and Disposals.

As of April 30, 2023 and October 31, 2022, $ 5,681,000 and $ 6,500,000 , respectively, were included in other assets.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Compensation $ 2,192 $ 3,572

4 unchanged sentences

$ 7,940 $ 11,060

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Long-Term Debt

Long-term debt is comprised of the following (in thousands):

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

AgWest Farm Credit revolving and non-revolving lines of credit:

the interest rate of the revolving line of credit is variable based on the one-month Secured Overnight Financing Rate ("SOFR"), which was 4.33 % at January 31, 2023, plus 1.85 %.

the interest rate of the revolving line of credit is variable based on the one-month Secured Overnight Financing Rate ("SOFR"), which was 4.80 % at April 30, 2023, plus 1.78 %.

The interest rate for the $ 40.0 million outstanding balance of the non-revolving line of credit is fixed at 3.57 % through July 1, 2025 and variable thereafter.

27 unchanged sentences

Long-term debt, less current portion $ 40,837 $ 104,076

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Long-Term Debt (continued)

The Company entered into a Master Loan Agreement (the “MLA”) with AgWest Farm Credit, formerly known as Farm Credit West, (the "Lender") dated June 1, 2021, together with a revolving credit facility supplement (the “Revolving Credit Supplement”), a non-revolving credit facility supplement (the “Non-Revolving Credit Supplement,” and together with the Revolving Credit Supplement, the “Supplements”) and an agreement to convert to a fixed interest rate for a period of time as described in the table above ("Fixed Interest Rate Agreement").

2 unchanged sentences

In March 2020, the Company entered into a revolving equity line of credit promissory note and loan agreement with the Lender for a $ 15,000,000 Revolving Equity Line of Credit (the "RELOC") secured by a first lien on the Windfall Investors, LLC property.

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

The Supplements and RELOC provide aggregate borrowing capacity of $ 130,000,000 comprised of $ 75,000,000 under the Revolving Credit Supplement, $ 40,000,000 under the Non-Revolving Credit Supplement and $ 15,000,000 under the RELOC.

As of January 31, 2023, the Company's outstanding borrowings under the Supplements and RELOC were $ 40,000,000 and it had $ 90,000,000 available to borrow.

In January 2023, the Company used the proceeds from the Northern Properties sale as described in Note 3 to reduce the Company's long-term debt.

The RELOC featured a 3 -year draw period followed by 20 years of fully amortized loan payments.

On March 31, 2023, the draw period expired and the RELOC was closed as there was no balance outstanding.

The Supplements provide aggregate borrowing capacity of $ 115,000,000 comprised of $ 75,000,000 under the Revolving Credit Supplement and $ 40,000,000 under the Non-Revolving Credit Supplement.

As of April 30, 2023, the Company's outstanding borrowings under the Supplements were $ 40,000,000 and it had $ 75,000,000 available to borrow.

In January 2023, the Company used the proceeds from the Northern Properties sale as described in Note 3 - Asset Sales and Disposals to reduce the Company's long-term debt.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Long-Term Debt (continued)

The interest rate in effect under the Revolving Credit Supplement automatically adjusts on the first day of each month.

8 unchanged sentences

Thereafter, the Company may prepay any amounts outstanding under the Non-Revolving Credit Supplement, provided that a fee equal to 0.50 % of the amount prepaid and any other cost or loss suffered by the Lender must be paid with any prepayment.

The interest rate in effect under the RELOC is a variable interest rate established by the Lender corresponding to the applicable interest rate group, which was 6.75 % as of January 31, 2023.

The interest rate may be adjusted automatically under the provisions of the Lender's variable interest rate plan.

The Company may prepay any amounts outstanding under the RELOC without penalty.

All indebtedness under the MLA and RELOC, including any indebtedness under the Supplements, is secured by a first lien on Company-owned stock or participation certificates, Company funds maintained with the Lender, the Lender’s unallocated surplus, and certain of the Company’s agricultural properties in Ventura counties in California and certain of the Company’s building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties.

All indebtedness under the MLA, including any indebtedness under the Supplements, is secured by a first lien on Company-owned stock or participation certificates, Company funds maintained with the Lender, the Lender’s unallocated surplus, and certain of the Company’s agricultural properties in Ventura counties in California and certain of the Company’s building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties.

The MLA includes customary default provisions that provide should an event of default occur, the Lender, at its option, may declare all or any portion of the indebtedness under the MLA to be immediately due and payable without demand, notice of nonpayment, protest or prior recourse to collateral, and terminate or suspend the Company’s right to draw or request funds on any loan or line of credit.

2 unchanged sentences

The Company was in compliance as of October 31, 2022.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Long-Term Debt (continued)

In February 2023, the Lender declared an annual cash patronage dividend of 1.25 % of average eligible loan balances and the Company received $ 1,413,000 in the second quarter of fiscal year 2023.

1 unchanged sentence

Interest is capitalized on non-bearing orchards, real estate development projects and significant construction in progress.

The Company capitalized interest of $ 347,000 and zero during the three months ended January 31, 2023 and 2022, respectively.

The Company capitalized interest of zero during the three months ended April 30, 2023 and 2022, and $ 306,000 and zero during the six months ended April 30, 2023 and 2022, respectively.

Capitalized interest is included in property, plant and equipment and real estate development assets in the Company’s consolidated balance sheets.

1 unchanged sentence

Other long-term liabilities consist of the following (in thousands):

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Minimum pension liability $ — $ 2,272

3 unchanged sentences

$ 6,670 $ 9,807

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Lessor Arrangements

4 unchanged sentences

Three Months Ended

April 30, Six Months Ended

2023 2022 2023 2022

Operating lease revenue $ 1,274 $ 1,295 $ 2,564 $ 2,413

8 unchanged sentences

All lease costs are primarily included in agribusiness costs and expenses in the Company's consolidated statements of operations.

Operating lease costs were $ 491,000 and $ 123,000 for the three months ended January 31, 2023 and 2022, respectively.

Finance lease costs were immaterial for the three months ended January 31, 2023 and 2022.

Variable and short term lease costs were $ 145,000 and $ 162,000 , respectively for the three months ended January 31, 2023,and were immaterial for the three months ended January 31, 2022.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Leases (continued)

Operating lease costs were $ 491,000 and $ 135,000 for the three months ended April 30, 2023 and 2022, respectively, and $ 982,000 and $ 258,000 for the six months ended April 30, 2023 and 2022, respectively.

Finance lease costs were immaterial and $ 98,000 for the three months ended April 30, 2023 and 2022, respectively and immaterial and $ 156,000 for the six months ended April 30, 2023 and 2022, respectively.

Variable lease costs were immaterial for the three and six months ended April 30, 2023 and 2022.

Short term lease costs were $ 175,000 and immaterial for the three months ended April 30, 2023 and 2022, respectively, and $ 338,000 and immaterial for the six months ended April 30, 2023 and 2022, respectively.

Supplemental balance sheet information related to leases consists of the following (in thousands):

Classification January 31, 2023 October 31, 2022

Classification April 30, 2023 October 31, 2022

Operating lease ROU assets Other assets $ 5,522 $ 6,190

7 unchanged sentences

$ 6,406 $ 7,222

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Leases (continued)

Supplemental cash flow information related to leases consists of the following (in thousands):

Three Months Ended

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

ROU assets obtained in exchange for new operating lease liabilities $ 114 $ 350

Leased assets obtained in exchange for new finance lease liabilities $ — $ 1,020

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of conversion of preferred stock.

Diluted net income (loss) per common share is calculated using the weighted-average number of common shares outstanding during the period plus the dilutive effect of unvested, restricted stock and conversion of preferred stock.

The computations for basic and diluted net income (loss) per common share are as follows (in thousands, except per share amounts):

Basic and Diluted Net (Loss) Income Per Share

Basic net (loss) income per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of conversion of preferred stock.

Diluted net (loss) income per common share is calculated using the weighted-average number of common shares outstanding during the period plus the dilutive effect of unvested, restricted stock and conversion of preferred stock.

The computations for basic and diluted net (loss) income per common share are as follows (in thousands, except per share amounts):

Three Months Ended

Basic net income (loss) per common share:

Net income (loss) applicable to common stock $ 15,506 $ ( 6,643 )

April 30, Six Months Ended

2023 2022 2023 2022

Basic net (loss) income per common share:

Net (loss) income applicable to common stock $ ( 1,739 ) $ 1,435 $ 13,767 $ ( 5,208 )

Effect of unvested, restricted stock ( 23 ) ( 15 ) ( 188 ) ( 29 )

Net income (loss) for basic EPS 15,345 ( 6,656 )

Net (loss) income for basic EPS ( 1,762 ) 1,420 13,579 ( 5,237 )

Weighted average common shares-basic 17,597 17,511 17,587 17,461

Basic net income (loss) per common share $ 0.87 $ ( 0.38 )

Diluted net income (loss) per common share:

Net income (loss) for basic EPS $ 15,345 $ ( 6,656 )

Basic net (loss) income per common share $ ( 0.10 ) $ 0.08 $ 0.77 $ ( 0.30 )

Diluted net (loss) income per common share:

Net (loss) income for basic EPS $ ( 1,762 ) $ 1,420 $ 13,579 $ ( 5,237 )

Effect of dilutive preferred stock — — 251 —

Net income (loss) for diluted EPS 15,470 ( 6,656 )

Net (loss) income for diluted EPS ( 1,762 ) 1,420 13,830 ( 5,237 )

Weighted average common shares–basic 17,597 17,511 17,587 17,461

1 unchanged sentence

Weighted average common shares–diluted 17,597 17,511 18,328 17,461

Diluted net income (loss) per common share $ 0.84 $ ( 0.38 )

Diluted net income (loss) per common share is computed using the more dilutive method of either the two-class method or the treasury stock method.

Diluted net (loss) income per common share $ ( 0.10 ) $ 0.08 $ 0.75 $ ( 0.30 )

Diluted net (loss) income per common share is computed using the more dilutive method of either the two-class method or the treasury stock method.

Unvested stock-based compensation awards that contain non-forfeitable rights to dividends as participating shares are included in computing earnings per share.

The Company’s unvested, restricted stock awards qualify as participating shares.

Diluted net income per common share was calculated under the two-class method for the three months ended January 31, 2023 and 2022.

Diluted net (loss) income per common share was calculated under the two-class method for the three and six months ended April 30, 2023 and 2022 .

LIMONEIRA COMPANY

2 unchanged sentences

The Company has transactions with equity method investments and various related parties summarized in Note 6 - Equity in Investments and in the tables below (in thousands):

January 31, 2023 October 31, 2022

April 30, 2023 October 31, 2022

Balance Sheet Balance Sheet

4 unchanged sentences

9 LLCB $ 66 $ — $ 3,444 $ — $ 66 $ — $ 3,444 $ —

Three Months Ended January 31, 2023 Three Months Ended January 31, 2022

Three Months Ended April 30, 2023 Three Months Ended April 30, 2022

Consolidated Statement of Operations Consolidated Statement of Operations

3 unchanged sentences

3 Cooperative association $ — $ — $ 473 $ — $ — $ — $ 419 $ —

5 Cadiz / Fenner / WAM $ — $ — $ 417 $ — $ — $ — $ 472 $ —

7 YMIDD $ 135 $ — $ 62 $ — $ — $ — $ 62 $ —

8 FGF $ 33 $ 50 $ — $ — $ 83 $ 171 $ — $ —

11 Third-party growers $ — $ — $ — $ — $ 104 $ — $ — $ —

12 Principal owner $ — $ — $ — $ 222 $ — $ — $ — $ —

Six Months Ended April 30, 2023 Six Months Ended April 30, 2022

Consolidated Statement of Operations Consolidated Statement of Operations

Ref Related Party Net Revenue Agribusiness Net Revenue Other Operations Agribusiness Expense and Other Dividends Paid Net Revenue Agribusiness Net Revenue Other Operations Agribusiness Expense and Other Dividends Paid

1 Employees $ — $ 444 $ — $ — $ — $ 430 $ — $ —

2 Mutual water companies $ — $ — $ 778 $ — $ — $ — $ 494 $ —

3 Cooperative association $ — $ — $ 866 $ — $ — $ — $ 784 $ —

4 Calavo $ — $ — $ — $ — $ — $ 80 $ 2 $ 126

2 unchanged sentences

8 FGF $ 116 $ 124 $ — $ — $ 165 $ 171 $ — $ —

11 Third-party growers $ — $ — $ — $ — $ 104 $ — $ 12 $ —

12 Principal owner $ — $ — $ — $ 431 $ — $ — $ — $ —

(1) Employees - The Company rents certain of its residential housing assets to employees on a month-to-month basis and recorded rental income from employees.

There were no material rental payments due from employees at January 31, 2023 or October 31, 2022.

There were no material rental payments due from employees at April 30, 2023 or October 31, 2022.

(2) Mutual water companies - The Company has representation on the boards of directors of the mutual water companies in which the Company has investments, as well as other water districts.

2 unchanged sentences

(3) Cooperative association - The Company has representation on the board of directors of a non-profit cooperative association that provides pest control services for the agricultural industry.

The Company purchased services and supplies from and had payments due to the cooperative association.

The Company purchased services and supplies from and had immaterial payments due to the cooperative association.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Related Party Transactions (continued)

(4) Calavo - Through January 2022, the Company had representation on the board of directors of Calavo.

3 unchanged sentences

(5) Cadiz / Fenner / WAM - A member of the Company’s board of directors serves as the CEO, President and a member of the board of directors of Cadiz, Inc.

In 2013, the Company entered a long-term lease agreement (the “Lease”) with Cadiz Real Estate, LLC (“Cadiz”), a wholly owned subsidiary of Cadiz, Inc., and currently leases 670 acres located in eastern San Bernardino County, California.

The annual base rent is equal to the sum of $ 200 per planted acre and 20 % of gross revenues from the sale of harvested lemons (less operating expenses), not to exceed $ 1,200 per acre per year.

In 2013, the Company entered a long-term lease agreement (the “Lease”) with Cadiz Real Estate, LLC (“Cadiz”), a wholly owned subsidiary of Cadiz, Inc., and leased 670 acres located in eastern San Bernardino County, California.

In 2016, Cadiz assigned this lease to Fenner Valley Farms, LLC (“Fenner”), a subsidiary of Water Asset Management, LLC (“WAM”).

As of the date of this lease assignment, the Company no longer has any related party transactions with Cadiz.

An affiliate of WAM is the holder of 9,300 shares of the Company's Series B-2 convertible preferred stock.

The annual base rent is equal to the sum of $ 200 per planted acre and 20 % of gross revenues from the sale of harvested lemons (less operating expenses), not to exceed $ 1,200 per acre per year.

Upon the adoption of ASC 842, the Company recorded a right-of-use, or ROU, asset and corresponding lease liability.

(7) Yuma Mesa Irrigation and Drainage District (“YMIDD”) - The Company has representation on the board of directors of YMIDD.

The Company purchased water from YMIDD and had immaterial amounts payable to them for such purchases.

The Company purchased water from YMIDD and had no amounts payable to them for such purchases.

Additionally, the Company received fallowing revenue from YMIDD.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Related Party Transactions (continued)

(8) FGF - The Company advances funds to FGF for fruit purchases, which are recorded as an asset until the sales occur and the remaining proceeds become due to FGF.

3 unchanged sentences

(9) LLCB - Refer to Note 5 - Real Estate Development.

(11) Third-party growers - A former member of the Company's board of directors marketed lemons through the Company.

The former board member resigned effective June 14, 2022 and is no longer a related-party.

(12) Principal owner - The Company has one principal owner with ownership shares over 10% and paid dividends to such owner.

The effective tax rate for the three months ended January 31, 2023 was higher than the federal statutory tax rate of 21% mainly due to foreign jurisdictions that are taxed at different rates, state taxes, tax impact of stock-based compensation, and nondeductible tax items.

The Company has no material uncertain tax positions as of January 31, 2023.

The effective tax rate for the six months ended April 30, 2023 was higher than the federal statutory tax rate of 21% mainly due to foreign jurisdictions that are taxed at different rates, state taxes, tax impact of executive compensation, and nondeductible tax items.

The Company has no material uncertain tax positions as of April 30, 2023.

The Company recognizes interest expense and penalties related to income tax matters as a component of income tax expense.

There was no accrued interest or penalties associated with uncertain tax positions as of January 31, 2023.

There was no accrued interest or penalties associated with uncertain tax positions as of April 30, 2023.

Retirement Plans

8 unchanged sentences

The Plan was funded consistent with the funding requirements of federal law and regulations.

There were no funding contributions during the three months ended January 31, 2022.

There were no funding contributions during the six months ended April 30, 2022.

Plan assets were invested in a group trust consisting primarily of pooled funds, mutual funds, cash and cash equivalents.

The components of net periodic pension cost for the Plan for the three months ended January 31, 2023 and 2022 were as follows (in thousands):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Retirement Plans (continued)

The components of net periodic pension cost for the Plan for the three and six months ended April 30, 2023 and 2022 were as follows (in thousands):

Three Months Ended

April 30, Six Months Ended

2023 2022 2023 2022

Administrative expenses $ — $ 179 $ 20 $ 359

5 unchanged sentences

Net periodic benefit cost $ — $ 292 $ 2,741 $ 585

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Commitments and Contingencies

2 unchanged sentences

Legal claims are inherently uncertain, however, and it is possible that the Company’s business, financial condition, liquidity and/or operating results could be adversely affected in the future by legal proceedings.

The Company is party to a lawsuit, initiated on March 27, 2018, against Southern California Edison in Superior Court of the State of California, County of Los Angeles whereby the Company is claiming unspecified damages, attorneys' fees and other costs, as a result of the Thomas Fire in fiscal year 2018.

While the outcome of this lawsuit is uncertain, the Company believes its claim for damages is valid.

The Company was party to a lawsuit, initiated on March 27, 2018, against Southern California Edison in Superior Court of the State of California, County of Los Angeles whereby the Company claimed unspecified damages, attorneys’ fees and other costs, as a result of the Thomas Fire in fiscal year 2018.

On April 18, 2023, the Company entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) with Southern California Edison Company and Edison International to formally resolve any and all claims related to the fire.

Under the terms of the Settlement Agreement, the Company was awarded a total settlement of $ 9,000,000 .

On May 19, 2023, the Company received $ 6,109,000 , net of legal and related costs, of which $ 3,840,000 is recorded in agribusiness revenues and $ 2,269,000 is recorded in gain on legal settlement as of April 30, 2023.

Stock-based Compensation

4 unchanged sentences

The Performance Awards are based on a percentage of the employee’s base salary divided by the stock price on the grant date once the performance criteria have been met, and generally vest over a two-year period as service is provided.

During December 2022, 79,972 shares of restricted stock with a per share price of $ 13.19 were granted to management under the Stock Plan for fiscal year 2022 performance, resulting in total compensation expense of approximately $ 1,055,000 , with $ 365,000 recognized in the fiscal year ended October 31, 2022 and the balance to be recognized over the next two years as the shares vest.

During December 2022, 79,972 shares of restricted stock with a per share price of $ 13.19 were granted to management under the Stock Plan for fiscal year 2022 performance, resulting in total compensation expense of approximately $ 1,055,000 , with $ 365,000 recognized in the fiscal year ended October 31, 2022, and the balance will be recognized over the next two years as the shares vest.

Executive Awards

3 unchanged sentences

The related compensation expense of approximately $ 725,000 will be recognized equally over the next three years as the shares vest.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Stock-based Compensation (continued)

In fiscal year 2022, the Company entered into Retention Bonus Agreements with key executives (collectively, the “Retention Bonus Agreements”) whereby the executives will be eligible to receive cash and restricted stock grants.

During December 2022, the Company granted 11,317 shares of common stock with a per share price of $ 13.19 to key executives related to the Retention Bonus Agreements.

During December 2022, the Company granted 11,317 shares of restricted stock with a per share price of $ 13.19 to key executives related to the Retention Bonus Agreements.

The related compensation expense of approximately $ 149,000 had $ 122,000 recognized in the fiscal year ended October 31, 2022, and the balance will be recognized over the next year as the shares vest.

During March 2023, the Company granted 127,064 shares of restricted stock with a per share price of $ 15.74 to key executives related to the Retention Bonus Agreements.

The related compensation expense of approximately $ 2,000,000 will be recognized over the next year as the shares vest.

Director Awards

The Company issues shares of restricted stock to non-employee directors under the Stock Plan on an annual basis that generally vest over a one-year period (“Director Awards”).

During March 2023, 22,836 shares of restricted stock were granted with a per share price of $ 16.26 as Director Awards, which vest over a one-year period from date of grant.

The related compensation expense of approximately $ 371,000 will be recognized equally over the next year as the shares vest.

Exchange of Common Stock

During the three months ended January 31, 2023 and 2022, members of management exchanged zero and 55,362 shares of common stock with fair values totaling zero and $ 900,000 , respectively, at the dates of the exchanges, for the payment of payroll taxes associated with the vesting of shares under the Stock Plan.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

During the six months ended April 30, 2023 and 2022, members of management exchanged 1,594 and 68,080 shares of common stock with fair values totaling $ 26,000 and $ 1,086,000 , respectively, at the dates of the exchanges, for the payment of payroll taxes associated with the vesting of shares under the Stock Plan.

Segment Information

8 unchanged sentences

The avocados segment includes sales, farming and harvest costs.

The other agribusiness segment includes sales, farming and harvest costs and brokered fruit costs of oranges, specialty citrus and other crops.

Revenues related to rental operations are included in “Corporate and Other.” Other agribusiness revenues consisted of oranges of $ 1,152,000 and specialty citrus and other crops of $ 1,247,000 for the three months ended January 31, 2023.

Other agribusiness revenues consisted of oranges of $ 873,000 and specialty citrus and other crops of $ 876,000 for the three months ended January 31, 2022.

The other agribusiness segment includes sales, farm management, farming and harvest costs and brokered fruit costs of oranges, specialty citrus and other crops.

Revenues related to rental operations are included in “Corporate and Other.” Other agribusiness revenues consisted of oranges of $ 1,383,000 and $ 2,535,000 and specialty citrus and other of $ 2,420,000 and $ 3,667,000 for the three and six months ended April 30, 2023.

Other agribusiness revenues consisted of oranges of $ 2,617,000 and $ 3,490,000 and specialty citrus and other of $ 1,441,000 and $ 2,317,000 for the three and six months ended April 30, 2022.

The Company does not separately allocate depreciation and amortization to its fresh lemons, lemon packing, avocados and other agribusiness segments.

1 unchanged sentence

The Company measures operating performance, including revenues and operating income, of its operating segments and allocates resources based on its evaluation.

The Company does not allocate selling, general and administrative expense, gain on disposal of assets, total other income (expense) and income taxes, or specifically identify them to its operating segments.

The Company earns packing revenue for packing lemons grown on its orchards and lemons procured from third-party growers.

The Company does not allocate selling, general and administrative expense, gain on disposal of assets, gain on legal settlement, total other income (expense) and income taxes, or specifically identify them to its operating segments.

The lemon packing segment earns packing revenue for packing lemons grown on its orchards and lemons procured from third-party growers.

Intersegment revenues represent packing revenues related to lemons grown on the Company’s orchards.

Segment information for the three months ended January 31, 2023 (in thousands):

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Segment Information (continued)

Segment information for the three months ended April 30, 2023 (in thousands):

Packing Eliminations

6 unchanged sentences

Total net revenues 32,847 16,732 ( 10,309 ) 3,603 3,803 46,676 1,394 48,070

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

Costs and expenses 29,977 12,075 ( 10,309 ) 1,023 3,683 36,449 13,439 49,888

Depreciation and amortization — — — — — 1,740 304 2,044

Operating income (loss) $ 2,870 $ 4,657 $ — $ 2,580 $ 120 $ 8,487 $ ( 12,349 ) $ ( 3,862 )

Segment information for the three months ended January 31, 2022 (in thousands):

Segment information for the three months ended April 30, 2022 (in thousands):

Packing Eliminations

8 unchanged sentences

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

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

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

Segment information for the six months ended April 30, 2023 (in thousands):

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 61,328 $ 12,071 $ — $ 3,603 $ 6,202 $ 83,204 $ 2,767 $ 85,971

Intersegment revenue — 17,672 ( 17,672 ) — — — — —

Total net revenues 61,328 29,743 ( 17,672 ) 3,603 6,202 83,204 2,767 85,971

Costs and expenses (gains) 63,277 23,428 ( 17,672 ) 1,023 5,499 75,555 ( 16,097 ) 59,458

Depreciation and amortization — — — — — 3,875 616 4,491

Operating income (loss) $ ( 1,949 ) $ 6,315 $ — $ 2,580 $ 703 $ 3,774 $ 18,248 $ 22,022

Segment information 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 )

Subsequent Events

The Company evaluated events subsequent to January 31, 2023 through the date of this filing, to assess the need for potential recognition or disclosure in this Quarterly Report on Form 10-Q.

The Company evaluated events subsequent to April 30, 2023 through the date of this filing, to assess the need for potential recognition or disclosure in this Quarterly Report on Form 10-Q.

Based upon this evaluation, except as described in the notes to the interim consolidated financial statements, it was determined that no other subsequent events occurred that require recognition or disclosure in the unaudited consolidated financial statements.

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 1. Financial Statements