What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-06-06 compared with 2023-03-09 · 295 added, 138 removed, 253 unchanged (63% of the section changed)

15 unchanged sentences

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 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”).

We also used 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”).

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

6 unchanged sentences

The agribusiness division is comprised of four reportable operating segments:

fresh lemons, lemon packing, avocados and other agribusiness, which includes oranges, specialty citrus and other crops.

fresh lemons, lemon packing, avocados and other agribusiness, which includes oranges, specialty citrus, other crops and farm management services.

The agribusiness division includes our core operations of farming, harvesting, lemon packing and lemon sales operations.

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

We sell the majority of our avocados and oranges, and sold the majority of our 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.

26 unchanged sentences

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.

We used 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).

1 unchanged sentence

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

California experienced above average precipitation during the first eight months of the 2022 - 2023 rainfall season after experiencing the three driest years on record.

The above average precipitation this season helped to alleviate the drought conditions in California.

Currently, the state is free from severe drought conditions and Ventura County was free from any drought conditions as of May 31, 2023.

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

In August 2021, the U.S.

Bureau of Reclamation declared a Level 1 Shortage Condition at Lake Mead in the Lower Colorado River Basin for the first time ever, requiring shortage reductions and water savings contributions for states in the southwest.

In January 2022, Arizona experienced water releases from Lake Mead reduced by approximately 18% of the state’s annual apportionment.

In August 2022, the U.S.

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.

Bureau of Reclamation (the “Bureau”) declared a Level 1 Shortage Condition at Lake Mead in the Lower Colorado River Basin for the first time ever, requiring shortage reductions and water savings contributions for states in the southwest.

In August 2022, the Bureau announced Lake Mead to operate in a Tier 2 shortage, which further increased water restrictions.

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

The Federal Government responded in April 2023 by proposing options for managing the Colorado River water shortage and a final decision is anticipated later this year.

In response to these water shortages, we entered into a fallowing agreement in fiscal year 2022 and continue to assess the impact these reductions may have on our Arizona orchards.

Recent Developments

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.

The agreement became effective on On January 25, 2023, when 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 $98.4 million and recorded a gain of approximately $40.0 million.

6 unchanged sentences

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.

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

On March 21, 2023, we declared a cash dividend of $0.075 per common share paid on April 14, 2023, in the aggregate amount of $1.3 million to stockholders of record as of April 4, 2023.

On April 18, 2023, we entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) with Southern California Edison and Edison International to formally resolve any and all claims related to the Thomas Fire in fiscal year 2018.

Under the terms of the Settlement Agreement, the Company was awarded a total settlement of $9.0 million.

On May 19, 2023, the Company received approximately $6.1 million, net of legal and related costs.

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

As a result, we 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.

COVID-19 Pandemic

2 unchanged sentences

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

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.

As of April 30, 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 four fiscal years.

The COVID-19 pandemic may continue to 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.

1 unchanged sentence

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 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.

Given the economic uncertainty as a result of the COVID-19 pandemic over the past four fiscal 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.

5 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:

Operating (loss) income:

Agribusiness 8,487 7,770 3,774 4,609

Other operations 385 288 520 405

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)

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)

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 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.

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, loss (gain) on disposal of assets, net, cash bonus related to the sale of assets and gain on legal settlement 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.

3 unchanged sentences

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 (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):

EBITDA and adjusted EBITDA are summarized and reconciled to net (loss) 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):

Three Months Ended

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

April 30, Six Months Ended

2023 2022 2023 2022

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

Interest income (62) (27) (70) (48)

Interest expense, (net of patronage dividends) (996) 696 176 481

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

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

Depreciation and amortization 2,044 2,483 4,491 4,963

3 unchanged sentences

Pension settlement cost — — 2,741 —

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

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

Cash bonus related to sale of assets — — 2,000 —

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

Adjusted EBITDA $ 6,155 $ 6,159 $ (1,713) $ 579

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,

Three Months Ended April 30, 2023 Compared to the Three Months Ended April 30, 2022

Total net revenues for the three months ended April 30, 2023 were $48.1 million, compared to $46.8 million for the three months ended April 30, 2022.

Agribusiness revenues are similar, as detailed below ($ in thousands):

Agribusiness Revenues for the Three Months Ended April 30,

2023 2022 Change

2 unchanged sentences

Oranges 1,383 2,617 (1,234) (47)%

Specialty citrus and other crops 1,247 876 371 42%

Specialty citrus and other 2,420 1,441 979 68%

Agribusiness revenues $ 46,676 $ 45,369 $ 1,307 3%

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 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.

The increase in the second quarter of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily the result of proceeds awarded from the Settlement Agreement in fiscal year 2023.

During the second quarter of fiscal years 2023 and 2022, fresh lemon sales were $26.6 million and $27.3 million, in aggregate, on 1,547,000 and 1,552,000 cartons of lemons sold at average per carton prices of $17.23 and $17.57, respectively.

Lemon revenues in the second quarter of fiscal years 2023 and 2022 included shipping and handling of $6.4 million and $6.7 million, brokered fruit and other lemon sales of $3.4 million and $2.7 million, and lemon by-product sales of $1.3 million and $1.1 million, respectively and included settlement proceeds of $1.4 million allocated to lemons in fiscal year 2023.

Revenues in the second quarter of fiscal year 2023 were similar to the same period of fiscal year 2022.

During the second quarter of fiscal years 2023 and 2022, 941,000 and 1,877,000 pounds of avocados were sold at an average per pound price of $1.30 and $1.90, respectively.

In addition, avocado revenues included settlement proceeds of $2.4 million allocated to avocados in fiscal year 2023.

The decrease in the second quarter of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily the result of decreased volume due to the sale of the Northern Properties.

During the second quarter of fiscal years 2023 and 2022, 88,000 and 328,000 cartons of oranges sold at an average per carton price of $15.72 and $7.98, respectively.

• Specialty citrus and other:

The increase in the second quarter of fiscal year 2023 was primarily the result of $1.4 million of farm management revenues.

There were no farm management revenues in the second quarter of fiscal year 2022.

Other operations revenue in the second quarter of fiscal years 2023 and 2022 were $1.4 million.

Costs and Expenses

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.

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

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

Our total costs and expenses in the second quarter of fiscal year 2023 were $51.9 million, compared to $44.2 million in the same period of fiscal year 2022.

The 18% increase of $7.8 million was primarily the result of the loss on disposal of Cadiz Ranch assets.

Costs and expenses associated with our agribusiness division are detailed below ($ in thousands):

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

2023 2022 Change

7 unchanged sentences

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.

In the second quarter of fiscal years 2023 and 2022, lemon packing costs were $12.1 million and $11.7 million, respectively.

During the second quarter of fiscal years 2023 and 2022, we packed and sold 1,547,000 and 1,552,000 cartons of lemons at average per carton costs of $7.81 and $7.51, respectively.

Additionally, in the second quarter of fiscal years 2023 and 2022, packing costs included $0.8 million and $0.6 million of shipping costs, respectively.

• Harvest costs:

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.

The increase in the second quarter of fiscal year 2023 was primarily the result of increased volume of lemons 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 quarter of fiscal year 2023 was primarily the result of farm management decisions based on weather, harvest timing and crop conditions.

The decrease in the second quarter of fiscal year 2023 was primarily the result of farm management decisions based on weather, harvest timing, crop conditions and decreased amortization of cultural costs due to the Northern Properties sale.

• 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 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.

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

Of the 1,547,000 and 1,552,000 cartons of lemons packed and sold during the second quarter of fiscal years 2023 and 2022, 765,000 (49%) and 795,000 (51%), respectively, were procured from third-party growers at average per carton prices of $11.46 and $10.13.

Additionally, in the second quarter of fiscal years 2023 and 2022, we incurred $2.6 million and $1.5 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

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.

Depreciation and amortization expense for the second quarter of fiscal years 2023 and 2022 was $1.7 million and $2.2 million, respectively.

Other operations expenses were $1.0 million and $1.1 million in the second quarter of fiscal years 2023 and 2022, respectively.

Loss on disposal of assets, net was $9.0 million and $0.3 million in the second quarter of fiscal years 2023 and 2022, respectively.

The increase is primarily related to the disposal of Cadiz Ranch assets in fiscal year 2023.

Gain on legal settlement was $2.3 million in the second quarter of fiscal year 2023 due to the Settlement Agreement related to the Thomas fire.

Selling, general and administrative costs and expenses were $6.0 million and $5.1 million in the second quarter of fiscal years 2023 and 2022, respectively.

The 17% increase of $0.9 million was primarily the result of:

2 unchanged sentences

• $0.1 million net increase in other selling, general and administrative expenses, primarily associated with our strategic initiatives.

Other Income (Expense)

Other income (expense) was $1.3 million and $(0.3) million in the second quarter of fiscal years 2023 and 2022, respectively.

The change of $1.6 million in other income was primarily the result of:

• $1.7 million decrease in interest expense as a result of a $1.4 million patronage dividend recorded in the second quarter of fiscal year 2023;

• $0.2 million decrease of equity in earnings of investments;

• $0.1 million increase of other income, net.

We recorded an estimated income tax benefit (provision) of $0.9 million and $(0.7) million in the second quarter of fiscal years 2023 and 2022 on pre-tax (loss) income of $(2.5) million and $2.3 million, respectively.

The tax benefit recorded for the second 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 executive compensation, and nondeductible tax items.

Our projected annual effective blended tax rate for fiscal year 2023, excluding discrete items, is approximately 30.4%.

Net Loss (Income) Attributable to Noncontrolling Interest

Net loss (income) attributable to noncontrolling interest represents 10% and 49% of PDA and Trapani Fresh, respectively, of the net loss (income) in the second quarter of fiscal years 2023 and 2022, respectively.

Six Months Ended April 30, 2023 Compared to the Six Months Ended April 30, 2022

Total net revenues for the six months ended April 30, 2023 and 2022 were $86.0 million.

Agribusiness revenues are detailed below ($ in thousands):

Agribusiness Revenues for the Six Months Ended April 30,

2023 2022 Change

Lemons $ 73,399 $ 73,303 $ 96 —%

Avocados 3,603 4,342 (739) (17)%

Oranges 2,535 3,490 (955) (27)%

Specialty citrus and other 3,667 2,317 1,350 58%

Agribusiness revenues $ 83,204 $ 83,452 $ (248) —%

Revenues in the first six months of fiscal year 2023 were similar compared to the same period of fiscal year 2022, primarily due to proceeds awarded from the Settlement Agreement in fiscal year 2023, partially offset by decreased brokered fruit and other lemon sales.

During the first six months of fiscal years 2023 and 2022, fresh lemon sales were $51.3 million and $52.0 million, in aggregate, on 2,855,000 and 2,759,000 cartons of lemons sold at average per carton prices of $17.98 and $18.85, respectively.

Lemon revenues in the first six months of fiscal years 2023 and 2022 included shipping and handling of $12.1 million and $12.7 million, brokered fruit and other lemon sales of $6.0 million and $6.5 million, and lemon by-product sales of $2.6 million and $2.1 million, respectively and included settlement proceeds of $1.4 million allocated to lemons in fiscal year 2023.

The decrease in the first six months of fiscal year 2023, compared to the same period in fiscal year 2022, was primarily the result of decreased volume and lower prices of avocados sold, partially offset by proceeds awarded from the Settlement Agreement in fiscal year 2023.

During the first six months of fiscal years 2023 and 2022, 941,000 and 2,242,000 pounds of avocados were sold at an average per pound price of $1.30 and $1.94, respectively.

In addition, avocado revenues included settlement proceeds of $2.4 million allocated to avocados in fiscal year 2023.

The decrease in the first six months of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily the result of decreased volume due to the sale of the Northern Properties.

During the first six months of fiscal years 2023 and 2022, 152,000 and 381,000 cartons of oranges were sold at an average per carton price of $16.68 and $9.16, respectively.

• Specialty citrus and other:

The increase in the first six months of fiscal year 2023, compared to the same period of fiscal year 2022 was primarily the result of $1.4 million of farm management revenues.

There were no farm management revenues in the first six months of fiscal year 2022.

Other operations revenue in the first six months of fiscal years 2023 and 2022 was $2.8 million and $2.6 million , respectively.

Costs and Expenses

Our total costs and expenses in the first six months of fiscal year 2023 were $63.9 million, compared to $93.0 million in the same period of fiscal year 2022.

The 31% decrease of $29.0 million was primarily the result of increased gain on disposal of assets, primarily related to the Northern Properties sale partially offset by the disposal of Cadiz Ranch assets.

Costs and expenses associated with our agribusiness division are detailed below ($ in thousands):

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

2023 2022 Change

Packing costs $ 25,172 $ 23,557 $ 1,615 7%

Harvest costs 10,385 10,812 (427) (4)%

Growing costs 13,620 16,275 (2,655) (16)%

Third-party grower and supplier costs 26,378 23,827 2,551 11%

Depreciation and amortization 3,875 4,372 (497) (11)%

Agribusiness costs and expenses $ 79,430 $ 78,843 $ 587 1%

• Packing costs:

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 six months of fiscal years 2023 and 2022, lemon packing costs were $23.4 million and $22.2 million, respectively.

During the first six months of fiscal years 2023 and 2022, we packed and sold 2,855,000 and 2,759,000 cartons of lemons at average per carton costs of $8.21 and $8.05, respectively.

Additionally, in the first six months of fiscal years 2023 and 2022, packing costs included $1.7 million and $1.3 million of shipping costs, respectively.

• Harvest costs:

The decrease in the first six months of fiscal year 2023 was primarily the result of decreased volume of avocados, oranges and specialty citrus 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 six months of fiscal year 2023 was primarily the result of farm management decisions based on weather, harvest timing, crop conditions and decreased amortization of cultural costs due to the Northern Properties sale.

• Third-party grower and supplier costs:

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

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

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

Of the 2,855,000 and 2,759,000 cartons of lemons packed and sold during the first six months of fiscal years 2023 and 2022, 1,630,000 (57%) and 1,488,000 (54%), respectively, were procured from third-party growers at average per carton prices of $12.60 and $13.00.

Additionally, in the first six months of fiscal years 2023 and 2022, we incurred $5.8 million and $4.5 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

Depreciation and amortization expense for the first six months of fiscal years 2023 and 2022 was $3.9 million and $4.4 million, respectively.

Other operations expenses were $2.2 million in the first six months of fiscal years 2023 and 2022.

(Gain) loss on disposal of assets, net was $(30.7) million and $0.3 million in the first six months of fiscal years 2023 and 2022, respectively.

The change is primarily related to the sale of our Northern Properties in fiscal year 2023, partially offset by the disposal of Cadiz Ranch assets.

Gain on legal settlement was $2.3 million in the second quarter of fiscal year 2023 due to the Settlement Agreement related to the Thomas fire.

Selling, general and administrative costs and expenses were $15.3 million and $11.7 million in the first six months of fiscal years 2023 and 2022, respectively.

The 30% increase of $3.6 million was primarily the result of:

• $2.6 million net increase in salaries, benefits and incentive compensation;

• $0.4 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) income was $(3.5) million and $0.3 million in the first quarter of fiscal years 2023 and 2022, respectively.

Other (expense) income was $(2.2) million and immaterial in the first six months of fiscal years 2023 and 2022, respectively.

The change of $(2.2) 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;

• $0.3 million decrease of interest expense, and

• $2.5 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.

We recorded an estimated income tax (provision) benefit of $(5.9) million and $1.9 million in the first six months of fiscal years 2023 and 2022 on pre-tax income (loss) of $19.8 million and $(7.0) million, respectively.

The tax provision recorded for the first six months 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 executive compensation, and nondeductible tax items.

Our projected annual effective blended tax rate for fiscal year 2023, excluding discrete items, is approximately 30.4%.

Net Loss Attributable to Noncontrolling Interest

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

Net loss attributable to noncontrolling interest represents 10% and 49% of PDA and Trapani Fresh, respectively, of the net loss in the first six months of fiscal years 2023 and 2022.

Segment Results of Operations

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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):

Three Months Ended April 30, 2023, Compared to the Three Months Ended April 30, 2022

The following table shows the segment results of operations for the three months ended April 30, 2023 (in thousands):

Packing Eliminations

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

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)

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

Packing Eliminations

Avocados Other

Agribusiness Total

Agribusiness Corporate

and Other Total

Revenues from external customers $ 30,992 $ 6,743 $ — $ 3,576 $ 4,058 $ 45,369 $ 1,381 $ 46,750

Intersegment revenue — 9,373 (9,373) — — — — —

Total net revenues 30,992 16,116 (9,373) 3,576 4,058 45,369 1,381 46,750

Costs and expenses 27,222 11,662 (9,373) 2,073 3,828 35,412 6,269 41,681

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

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

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, brokered fruit and other lemon revenue.

For the second quarter of fiscal years 2023 and 2022, our fresh lemons segment total net revenues were $32.8 million and $31.0 million, respectively.

The 6% increase of $1.9 million was primarily the result of proceeds awarded from the Settlement Agreement allocated to fresh lemons in fiscal year 2023.

Costs and expenses associated with our fresh lemons segment include growing costs, harvest costs, cost of lemons we procure from third-party growers and suppliers, transportation costs and packing service charges incurred from the lemon packing segment to pack lemons for sale.

For the second quarter of fiscal years 2023 and 2022, our fresh lemons segment costs and expenses were $30.0 million and $27.2 million, respectively.

The 10% increase of $2.8 million was primarily the result of:

• Harvest costs for the second quarter of fiscal year 2023 were $1.7 million higher than the same period of fiscal year 2022.

• Growing costs for the second quarter of fiscal year 2023 were $0.1 million higher than the same period of fiscal year 2022.

• Third-party grower and supplier costs for the second quarter of fiscal year 2023 were $0.2 million lower than the same period of fiscal year 2022.

• Transportation costs for the second quarter of fiscal year 2023 were $0.1 million higher than the same period of fiscal year 2022.

• Intersegment costs and expenses for the second quarter of fiscal year 2023 were $0.9 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 second quarter of fiscal years 2023 and 2022, our lemon packing segment total net revenues were $16.7 million and $16.1 million, respectively.

The 4% increase of $0.6 million was primarily the result of increased intersegment packing revenue.

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

For the second quarter of fiscal years 2023 and 2022, our lemon packing costs and expenses were $12.1 million and $11.7 million, respectively.

The 4% increase of $0.4 million was primarily the result of increased labor and benefit costs.

For the second quarter of fiscal years 2023 and 2022, lemon packing segment operating income per carton sold was $3.01 and $2.87, respectively.

In the second quarter of fiscal years 2023 and 2022, the lemon packing segment included $10.3 million and $9.4 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

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

For the second quarter of fiscal years 2023 and 2022, our avocados segment had revenues of $3.6 million.

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

For the second quarter of fiscal years 2023 and 2022, our avocados segment costs and expenses were $1.0 million and $2.1 million, respectively.

The decrease of $1.1 million primarily consisted of the following:

• Harvest costs for the first six months of fiscal year 2023 were $0.2 million lower than the same period of fiscal year 2022.

• Growing costs for the first six months of fiscal year 2023 were $0.8 million lower than the same period of fiscal year 2022.

Other Agribusiness

For the second quarter of fiscal years 2023 and 2022, our other agribusiness segment total net revenues were $3.8 million and $4.1 million, respectively.

The 6% decrease of $0.3 million was primarily the result of:

• Orange revenues for the second quarter of fiscal year 2023 were $1.2 million lower than the same period of fiscal year 2022.

• Specialty citrus and other revenues for the second quarter of fiscal year 2023 were $1.0 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 second quarter of fiscal years 2023 and 2022, our other agribusiness costs and expenses were $3.7 million and $3.8 million, respectively.

The 4% decrease of $0.1 million was primarily the result of:

• Harvest costs for the second quarter of fiscal year 2023 were $0.8 million lower than the same period of fiscal year 2022.

• Growing costs for the second quarter of fiscal year 2023 were $1.3 million lower than the same period of fiscal year 2022.

• Purchased fruit costs for the second quarter of fiscal year 2023 were $2.0 million higher than the same period of fiscal year 2022.

Total agribusiness depreciation and amortization expenses for the second quarter of fiscal years 2023 and 2022 were $1.7 million and $2.2 million, respectively.

Corporate and Other

Our corporate and other operations had revenues of $1.4 million for the second quarter of fiscal years 2023 and 2022.

Costs and expenses in our corporate and other operations for the second quarter of fiscal years 2023 and 2022 were approximately $13.4 million and $6.3 million, respectively, and include selling, general and administrative costs and expenses, loss on disposal of assets and gain on legal settlement not allocated to the operating segments.

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

Six Months Ended April 30, 2023, Compared to the Six Months Ended April 30, 2022

The following table shows the segment results of operations 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 (gain) 63,277 23,428 (17,672) 1,023 5,499 75,555 (16,097) 59,458

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

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

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

Packing Eliminations

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

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

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

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

Fresh lemons segment revenue is comprised of sales of fresh lemons, lemon by-products, brokered fruit and other lemon revenue.

For the first six months of fiscal years 2023 and 2022, our fresh lemons segment total net revenues were $61.3 million and $60.6 million, respectively.

The 1% increase of $0.7 million was primarily the result of proceeds awarded from the Settlement Agreement allocated to fresh lemons in fiscal year 2023, partially offset by a net decrease in brokered fruit and other lemon sales.

For the first six months of fiscal years 2023 and 2022, our fresh lemons segment costs and expenses were $63.3 million and $59.4 million, respectively.

The 7% increase of $3.9 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.

• Harvest costs for the first six months of fiscal year 2023 were $0.7 million higher than the same period of fiscal year 2022.

• Growing costs for the first six months of fiscal year 2023 were $1.2 million higher than the same period of fiscal year 2022.

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

• Transportation costs for the first six months of fiscal year 2023 were $0.4 million higher than the same period of fiscal year 2022.

• Intersegment costs and expenses for the first six months of fiscal year 2023 were $1.7 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 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 six months of fiscal years 2023 and 2022, our lemon packing segment total net revenues were $29.7 million and $28.7 million, respectively.

The 4% increase of $1.1 million was primarily the result of increased volume of lemons packed and sold and increased intersegment packing revenue.

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.

For the first six months of fiscal years 2023 and 2022, our lemon packing costs and expenses were $23.4 million and $22.2 million, respectively.

The 5% increase of $1.2 million was primarily the result of increased volume of lemons packed and sold and increased labor and benefit costs.

For the first six months of fiscal years 2023 and 2022, lemon packing segment operating income per carton sold was $2.21 and $2.34, respectively.

In the first six months of fiscal years 2023 and 2022, the lemon packing segment included $17.7 million and $16.0 million, respectively, of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

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

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

For the first six months of fiscal year 2023 and 2022, our avocados segment had revenues of $3.6 million and $4.3 million, respectively.

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

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

For the first six months of fiscal years 2023 and 2022, our avocados segment costs and expenses were $1.0 million and $2.4 million, respectively.

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

• Harvest costs for the first six months of fiscal year 2023 were $0.3 million lower than the same period of fiscal year 2022.

• Growing costs for the first six months of fiscal year 2023 were $1.1 million lower than the same period of fiscal year 2022.

Other Agribusiness

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.

For the first six months of fiscal years 2023 and 2022, our other agribusiness segment total net revenues were $6.2 million and $5.8 million, respectively.

The 7% increase of $0.4 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.

• Orange revenues for the first six months of fiscal year 2023 were $1.0 million lower than the same period of fiscal year 2022.

• Specialty citrus and other revenues for the first six months of fiscal year 2023 were $1.4 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 quarter of fiscal years 2023 and 2022, our other agribusiness costs and expenses were $1.8 million and $2.6 million, respectively.

For the first six months of fiscal years 2023 and 2022, our other agribusiness costs and expenses were $5.5 million and $6.4 million, respectively.

The (15)% decrease of $0.9 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.

• Harvest costs for the first six months of fiscal year 2023 were $0.8 million lower than the same period of fiscal year 2022.

• Growing costs for the first six months of fiscal year 2023 were $2.7 million lower than the same period of fiscal year 2022.

• Purchased fruit costs for the first six months of fiscal year 2023 were $2.6 million higher than the same period of fiscal year 2022.

Total agribusiness depreciation and amortization expenses for the first six months of fiscal years 2023 and 2022 were $3.9 million and $4.4 million, respectively.

Corporate and Other

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.

Our corporate and other operations had revenues of $2.8 million and $2.6 million for the first six months of fiscal years 2023 and 2022, respectively.

Costs and expenses in our corporate and other operations for the first six months of fiscal years 2023 and 2022 were approximately $(16.1) million and $13.6 million, respectively, and include selling, general and administrative costs and expenses, (gain) loss on disposal of assets and gain on legal settlement not allocated to the operating segments.

Depreciation and amortization expenses for the first six months of fiscal years 2023 and 2022 were similar at $0.6 million.

Seasonal Operations

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

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

Results of Operations for the Trailing Twelve Months Ended April 30, 2023 and 2022

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

Trailing Twelve Months Ended January 31,

Trailing Twelve Months Ended April 30,

Net revenues:

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(Gain) loss on disposal of assets (35,505) 370

Gain on legal settlement (2,269) —

Selling, general and administrative 25,375 20,041

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

• 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.

• Total revenues increased $15.9 million in the twelve months ended April 30, 2023, compared to the twelve months ended April 30, 2022, primarily related to increased agribusiness revenues, particularly increased avocado sales, oranges and specialty crops.

• Total costs and expenses decreased $25.3 million in the twelve months ended April 30, 2023, compared to the twelve months ended April 30, 2022, primarily related to gain on disposal of assets and gain on legal settlement, partially offset by increased agribusiness costs and selling, general and administrative expenses.

• Total other expense increased $5.6 million in the twelve months ended April 30, 2023, compared to the twelve months ended April 30, 2022, primarily related to decreased equity in earnings of investments and increased other expense primarily due to pension settlement costs.

• Income tax provision increased $10.6 million in the twelve months ended April 30, 2023, compared to the twelve months ended April 30, 2022, primarily related to an increase in pre-tax income of $35.6 million.

Liquidity and Capital Resources

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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.

See Note 10 - Long-Term Debt and Note 12 - Leases for amounts outstanding as of April 30, 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.

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Cash Flows from Operating Activities

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.

For the six months ended April 30, 2023, net cash used in operating activities was $18.4 million, compared to net cash used in operating activities of $1.2 million for the six months ended April 30, 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.

• Net income (loss) for the six months ended April 30, 2023 and 2022 was $13.9 million and $(5.0) million, respectively.

The components of net income in the six months ended April 30, 2023, compared to the net loss in the same period in fiscal year 2022 consisted of an increase in operating income of $29.0 million, an increase in total other expense of $2.2 million and an increase in income tax provision of $7.8 million.

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

◦ Adjustments used $18.5 million and provided $5.0 million in the six months ended April 30, 2023 and 2022, respectively, primarily related to depreciation and amortization, gain on disposal of assets, stock compensation expense and deferred income taxes.

◦ Changes in operating assets and liabilities used $13.8 million and $1.1 million of operating cash in the six months ended April 30, 2023 and 2022, respectively, primarily related to accounts receivables/other from related parties, cultural costs, prepaid expenses/other current assets, accounts payable/growers and suppliers payable and accrued liabilities/payables to related parties.

Cash Flows from Investing Activities

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.

For the six months ended April 30, 2023 and 2022, net cash provided by (used in) investing activities was $95.4 million and $(0.4) million, respectively.

• The $95.4 million of cash provided by investing activities during the six months ended April 30, 2023 was comprised primarily of net proceeds from sales of assets of $98.5 million, net proceeds from the sale of real estate development assets of $2.6 million, partially offset by capital expenditures of $5.4 million, primarily related to orchard and vineyard development.

• The $0.4 million of cash used in investing activities during the six months ended April 30, 2022 was comprised primarily of capital expenditures of $4.1 million primarily related to orchard and vineyard development, partially offset by net proceeds from sales of assets of $1.1 million and collection of note receivable of $2.6 million.

Cash Flows from Financing Activities

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.

For the six months ended April 30, 2023 and 2022, net cash (used in) provided by financing activities was $(68.0) million and $2.3 million, respectively.

• The $68.0 million of cash used in financing activities during the six months ended April 30, 2023 was comprised primarily of net repayments of long-term debt of $64.8 million and common and preferred stock dividends of $2.9 million.

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

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The MLA governs the terms of the Supplements.

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

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

The Supplements provide aggregate borrowing capacity of $115.0 million, comprised of $75.0 million under the Revolving Credit Supplement and $40.0 million under the Non-Revolving Credit Supplement.

As of April 30, 2023, our outstanding borrowings under the AgWest Farm Credit Facility were $40.0 million and we had $75.0 million of availability.

On January 31, 2023, the Company sold the Northern Properties which resulted in total net proceeds of $98.4 million.

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

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

Such preferred dividends paid were $0.3 million in the six months ended April 30, 2023 and 2022.

Cash dividends declared in the six months ended April 30, 2023 and 2022 were $0.15 per common share and such dividends paid were $2.7 million in the six months ended April 30, 2023 and 2022.

Critical Accounting Estimates

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

During the three months ended January 31, 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.

During the six months ended April 30, 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.

2 unchanged sentences

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