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Item 2. Management’s Discussion and Analysis

2023-09-07 compared with 2023-06-06 · 241 added, 216 removed, 332 unchanged (58% of the section changed)

4 unchanged sentences

We are one of California’s oldest citrus growers.

According to Sunkist Growers, Inc.

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

According to Sunkist Growers, Inc., we are one of the largest growers of lemons in the United States and, according to the California Avocado Commission, one of the largest growers of avocados in the United States.

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

7 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 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 also use surface water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District (“YMIDD”).

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

We also used ground water from the Cadiz Valley Basin in California's San Bernardino County.

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.

1 unchanged sentence

We currently have an interest in three real estate development projects in California.

These projects include multi-family housing and single-family homes of approximately 900 units in various stages of planning and development.

These projects include multi-family housing, single-family homes and apartments of approximately 900 units in various stages of planning and development.

Business Division Summary

6 unchanged sentences

The real estate development division includes our investments in real estate development projects.

Financial information and discussion of our four reportable segments are contained in the notes to the accompanying consolidated financial statements of this Quarterly Report on Form 10-Q.

Financial information and discussion of our four reportable segments are contained in the notes to the accompanying consolidated financial statements of this Quarterly Report.

Agribusiness Summary

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 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.

We sell our avocados and oranges, and sold our specialty citrus, to third-party packinghouses.

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

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

6 unchanged sentences

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

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

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

Our avocado producing business is important to us and we are currently assessing all of our farmland in Ventura County for opportunities to expand our plantings of avocados.

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

18 unchanged sentences

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

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

Our Associated Citrus Packers, Inc.

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

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

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

California experienced above average precipitation during the first ten 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.

As of July 31, 2023, the state was free from severe drought conditions and Ventura County was free from any drought conditions.

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

4 unchanged sentences

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.

In response to these water shortages, we entered into fallowing agreements in fiscal years 2023 and 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 an adjusted purchase price of approximately $100.0 million.

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.

The agreement became effective 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.

7 unchanged sentences

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 June 27, 2023, we declared a cash dividend of $0.075 per common share paid on July 14, 2023, in the aggregate amount of $1.3 million to stockholders of record as of July 11, 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.

2 unchanged sentences

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.

As a result, we ceased farming operations, disposed of the related property, plant and equipment and recorded a loss on disposal of assets of $9.0 million in the second quarter of fiscal year 2023.

In August 2023, we engaged with YMIDD and the United States Bureau of Reclamation in a fallowing and forbearance program at our Associated ranch in Yuma, Arizona.

We expect to receive approximately $1.3 million annually, paid in quarterly installments, for fallowing approximately 600 acres out of 1,300 acres of farmland through calendar year 2025.

COVID-19 Pandemic

2 unchanged sentences

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

As of April 30, 2023, the demand within both markets is recovering but has not yet returned to pre-pandemic levels.

As of July 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 four fiscal years.

2 unchanged sentences

Risk Factors of our Annual Report on Form 10-K for the year ended October 31, 2022.

Notwithstanding the adverse impacts and subject to unforeseen changes that may arise as the COVID-19 pandemic continues, we currently expect improvement in fiscal year 2023 compared to fiscal year 2022.

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

6 unchanged sentences

Three Months Ended

April 30, Six Months Ended

July 31, Nine Months Ended

2023 2022 2023 2022

17 unchanged sentences

Operating (loss) income (1,549) 11,060 20,473 4,088

Other income (expense):

Other (expense) income:

Interest income 178 6 248 54

1 unchanged sentence

Equity in earnings of investments, net 199 331 514 681

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

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

Other (expense) income, net (215) 13 (2,627) 106

Total other expense (79) (422) (2,282) (412)

(Loss) income before income tax benefit (provision) (1,628) 10,638 18,191 3,676

1 unchanged sentence

Net (loss) income (1,250) 7,325 12,654 2,291

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

Net loss attributable to noncontrolling interest 87 52 201 129

Net (loss) income attributable to Limoneira Company $ (1,163) $ 7,377 $ 12,855 $ 2,420

8 unchanged sentences

Three Months Ended

April 30, Six Months Ended

July 31, Nine Months Ended

2023 2022 2023 2022

12 unchanged sentences

Adjusted EBITDA $ 2,842 $ 14,785 $ 1,129 $ 15,364

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,

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

Total net revenues for the three months ended July 31, 2023 were $52.5 million, compared to $58.9 million for the three months ended July 31, 2022.

The 11% decrease of $6.4 million was primarily the result of decreased avocados, oranges and lemons agribusiness revenues, partially offset by increases in farm management and specialty citrus and other agribusiness revenues, as detailed below (in thousands):

Agribusiness Revenues for the Three Months Ended July 31,

2023 2022 Change

3 unchanged sentences

Specialty citrus and other 1,900 1,120 780 70%

Farm management 5,383 — 5,383 —%

Agribusiness revenues $ 51,092 $ 57,594 $ (6,502) (11)%

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.

The decrease in the third quarter of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily related to decreased volume and lower prices of fresh lemons sold.

During the third quarter of fiscal years 2023 and 2022, fresh lemon sales were $24.2 million and $27.8 million, in aggregate, on 1,352,000 and 1,512,000 cartons of lemons sold at average per carton prices of $17.92 and $18.39, respectively.

Lemon revenues in the third quarter of fiscal years 2023 and 2022 included shipping and handling of $5.5 million and $6.3 million, brokered lemons and other lemon sales of $8.8 million and $5.0 million, and lemon by-product sales of $0.6 million and $1.1 million, respectively.

The decrease in the third quarter of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily the result of decreased volume and lower prices of avocados sold, partially offset by crop insurance proceeds in fiscal year 2023.

The California avocado crop typically experiences alternating years of high and low production due to plant physiology.

During the third quarter of fiscal years 2023 and 2022, 2,822,000 and 5,694,000 pounds of avocados were sold at an average per pound price of $0.99 and $2.21, respectively.

Avocados agribusiness revenue in the third quarter of fiscal year 2023 included $0.7 million from crop insurance proceeds.

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

During the third quarter of fiscal years 2023 and 2022, we sold 71,000 and 209,000 cartons of oranges at an average per carton price of $18.17 and $17.88, 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.

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

During the third quarter of fiscal years 2023 and 2022, we sold 70,000 and 61,000 40-pound carton equivalents of specialty citrus at an average per carton price of $25.88 and $18.34, respectively.

• Farm management:

Farm management revenues in the third quarter of fiscal year 2023 were $5.4 million, primarily related to the Northern Properties farming, management and operations services.

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

Other operations revenue in the third quarter of fiscal years 2023 and 2022 was $1.4 million and $1.3 million, respectively.

Costs and Expenses

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,

Total costs and expenses in the third quarter of fiscal year 2023 were $54.0 million, compared to $47.9 million in the same period of fiscal year 2022.

The 13% increase of $6.1 million was primarily related to increases in growing costs and packing costs, partially offset by decreases in third-party grower and supplier costs and depreciation and amortization.

Agribusiness costs and expenses are detailed below (in thousands):

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

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 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.

In the third quarter of fiscal years 2023 and 2022, lemon packing costs were $13.1 million and $12.0 million, respectively.

During the third quarter of fiscal years 2023 and 2022, we packed and sold 1,352,000 and 1,512,000 cartons of lemons at average per carton costs of $9.72 and $7.91, respectively.

The increase in per carton packing costs was primarily related to increased labor and benefit costs.

Additionally, in the third quarter of fiscal years 2023 and 2022, packing costs included $0.6 million and $0.5 million of shipping costs, respectively.

• Harvest costs:

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.

Harvest costs in the third quarter of fiscal year 2023 were similar to the same period of 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 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.

The increase in the third quarter of fiscal year 2023, compared to the same period in fiscal year 2022, was primarily related to the Northern Properties farm management costs which were expensed in fiscal year 2023 and were capitalized as cultural costs in fiscal year 2022, as well as farm management decisions based on weather, harvest timing and crop conditions.

• Third-party grower and supplier costs:

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

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

The 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.

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

The decrease in the third quarter of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily the result of decreased volume and lower prices of third-party grower fruit sold.

Of the 1,352,000 and 1,512,000 cartons of lemons packed and sold during the third quarter of fiscal years 2023 and 2022, 594,000 (44%) and 695,000 (46%), respectively, were procured from third-party growers at average per carton prices of $10.78 and $12.42.

In the third quarter of fiscal years 2023 and 2022, we incurred $8.2 million and $7.0 million, respectively, of costs for purchased, packed fruit for resale.

• Depreciation and amortization:

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:

• $0.5 million net increase in salaries, benefits and incentive compensation;

• $0.3 million increase in selling expenses;

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

The decrease in the third quarter of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily related to the Northern Properties sale in fiscal year 2023.

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

Loss on disposal of assets, net was $1.5 million and $0.2 million in the third quarter of fiscal years 2023 and 2022, respectively.

The increase is primarily related to the loss on disposal of assets in preparation for the Yuma, Arizona fallowing program and other orchard disposals.

Selling, general and administrative costs and expenses were $4.6 million and $5.0 million in the third quarter of fiscal years 2023 and 2022, respectively.

The 8% decrease of $0.4 million was primarily the result of:

• $0.8 million net decrease in salaries, benefits and incentive compensation;

• $0.2 million decrease in selling expenses;

• $0.6 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.

Other (Expense) Income

Total other expense was $0.1 million and $0.4 million in the third quarter of fiscal years 2023 and 2022, respectively.

The decrease of $0.3 million in total other expense was primarily the result of:

• $0.5 million decrease in interest expense as a result of decreased long-term debt;

• $0.2 million increase in other expense.

We recorded an estimated income tax benefit (provision) of $0.4 million and $(3.3) million in the third quarter of fiscal years 2023 and 2022 on pre-tax (loss) income of $(1.6) million and $10.6 million, respectively.

The tax benefit recorded for the third quarter of fiscal year 2023 differs from the U.S.

federal statutory tax rate of 21.0% due primarily to foreign jurisdictions that 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 33.5%.

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,

Net Loss Attributable to Noncontrolling Interest

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

Nine Months Ended July 31, 2023 Compared to the Nine Months Ended July 31, 2022

Total net revenues for the nine months ended July 31, 2023 were $138.5 million, compared to $144.9 million for the nine months ended July 31, 2022.

The 4% decrease of $6.4 million was primarily the result of decreased avocados, oranges and lemons agribusiness revenues, partially offset by increases in farm management and specialty citrus and other agribusiness revenues, as detailed below (in thousands):

Agribusiness Revenues for the Nine Months Ended July 31,

2023 2022 Change

3 unchanged sentences

Specialty citrus and other 4,163 3,437 726 21%

Farm management 6,787 — 6,787 —%

Agribusiness revenues $ 134,296 $ 141,046 $ (6,750) (5)%

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.

The decrease in the first nine months of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily related to decreased volume and lower prices of fresh lemons sold.

During the first nine months of fiscal years 2023 and 2022, fresh lemon sales were $75.6 million and $79.8 million, in aggregate, on 4,206,000 and 4,271,000 cartons of lemons sold at average per carton prices of $17.96 and $18.68, respectively.

Lemon revenues in the first nine months of fiscal years 2023 and 2022 included shipping and handling of $17.5 million and $19.0 million, brokered lemons and other lemon sales of $14.8 million and $11.5 million, and lemon by-product sales of $3.1 million and $3.1 million, respectively, and included legal settlement proceeds of $1.4 million allocated to lemons in fiscal year 2023.

The decrease in the first nine 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 legal settlement proceeds and crop insurance proceeds in fiscal year 2023.

The California avocado crop typically experiences alternating years of high and low production due to plant physiology.

During the first nine months of fiscal years 2023 and 2022, 3,763,000 and 7,936,000 pounds of avocados were sold at an average per pound price of $1.06 and $2.13, respectively.

In addition, avocado revenues included legal settlement proceeds of $2.4 million allocated to avocados and crop insurance proceeds of $0.7 million in fiscal year 2023.

The decrease in the first nine 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 in fiscal year 2023.

During the first nine months of fiscal years 2023 and 2022, 223,000 and 590,000 cartons of oranges were sold at an average per carton price of $17.15 and $12.25, 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.

The increase in the first nine months of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily the result of higher prices, partially offset by decreased volume of specialty citrus sold.

During the first nine months of fiscal years 2023 and 2022, we sold 165,000 and 366,000 40-pound carton equivalents of specialty citrus at an average per carton price of $24.70 and $9.26, respectively.

• Farm management:

Farm management revenues in the first nine months of fiscal year 2023 were $6.8 million, primarily related to the Northern Properties farming, management and operations services.

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

Other operations revenue in the first nine months of fiscal years 2023 and 2022 was $4.2 million and $3.9 million , respectively.

The increase in the first nine months of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily related to an increase in leased land revenue.

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,

Total costs and expenses in the first nine months of fiscal year 2023 were $118.0 million, compared to $140.9 million in the same period of fiscal year 2022.

The 16% decrease of $22.9 million was primarily the result of increased gain on disposal of assets, primarily related to the Northern Properties sale partially offset by the loss on disposal of Cadiz Ranch assets, and increased agribusiness costs and expenses.

Agribusiness costs and expenses are detailed below (in thousands):

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

2023 2022 Change

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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.

In the first nine months of fiscal years 2023 and 2022, lemon packing costs were $36.6 million and $34.2 million, respectively.

During the first nine months of fiscal years 2023 and 2022, we packed and sold 4,206,000 and 4,271,000 cartons of lemons at average per carton costs of $8.69 and $8.00, respectively.

The increase in per carton packing costs was primarily related to increased labor and benefit costs.

Additionally, in the first nine months of fiscal years 2023 and 2022, packing costs included $2.4 million and $1.8 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.

The decrease in harvest costs in the first nine months of fiscal year 2023, compared to the same period in fiscal year 2022, was primarily the result of decreased volume of avocados, oranges and specialty citrus harvested, partially offset by increased volume of lemons harvested.

• 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.

The increase in the first nine months of fiscal year 2023, compared to the same period in fiscal year 2022, was primarily related to the Northern Properties farm management costs which were expensed in fiscal year 2023 and were capitalized as cultural costs in fiscal year 2022, as well as farm management decisions based on weather, harvest timing and crop conditions.

• Third-party grower and supplier costs:

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

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

The 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.

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

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

Of the 4,206,000 and 4,271,000 cartons of lemons packed and sold during the first nine months of fiscal years 2023 and 2022, 2,224,000 (53%) and 2,183,000 (51%), respectively, were procured from third-party growers at average per carton prices of $12.11 and $12.81.

Additionally, in the first nine months of fiscal years 2023 and 2022, we incurred $14.0 million and $11.5 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.

Depreciation and amortization expense for the first nine months of fiscal years 2023 and 2022 was $5.6 million and $6.5 million, respectively.

The decrease in the first nine months of fiscal year 2023, compared to the same period of fiscal year 2022, was primarily related to the Northern Properties sale in fiscal year 2023.

Other operations expenses were $3.3 million in the first nine months of fiscal years 2023 and 2022.

(Gain) loss on disposal of assets, net was $(29.2) million and $0.5 million in the first nine months of fiscal years 2023 and 2022, respectively.

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

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

Selling, general and administrative costs and expenses were $19.9 million and $16.8 million in the first nine months of fiscal years 2023 and 2022, respectively.

The 19% increase of $3.2 million was primarily the result of:

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Other (Expense) Income

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:

• $0.3 million decrease of interest expense, and

• $2.5 million increase of other expense, net;

Total other expense was $2.3 million and $0.4 million in the first nine months of fiscal years 2023 and 2022, respectively.

The increase of $1.9 million in total other expense was primarily the result of:

• $0.8 million decrease of interest expense as a result of decreased long-term debt;

• $2.7 million increase of other expense;

primarily as a result of pension settlement costs

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.

We recorded an estimated income tax provision of $5.5 million and $1.4 million in the first nine months of fiscal years 2023 and 2022 on pre-tax income of $18.2 million and $3.7 million, respectively.

The tax provision recorded for the first nine 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.

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Net Loss Attributable to Noncontrolling Interest

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.

Net loss attributable to noncontrolling interest represents 10% and 49% of PDA and Trapani Fresh, respectively, of the net loss in the first nine 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 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):

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

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

Packing Eliminations

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Depreciation and amortization — — — — — 1,735 284 2,019

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):

Operating (loss) income $ 2,827 $ 2,016 $ — $ 432 $ 707 $ 4,247 $ (5,796) $ (1,549)

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

Packing Eliminations

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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.

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

For the third quarter of fiscal years 2023 and 2022, our fresh lemons segment total net revenues were $33.6 million and $33.8 million, respectively.

The 1% decrease of $0.2 million was primarily the result of:

• Fresh lemon sales decreased $3.6 million;

• Lemon by-products sales decreased $0.5 million;

• Brokered lemons and other lemon sales increased $3.8 million.

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.

For the third quarter of fiscal years 2023 and 2022, our fresh lemons segment costs and expenses were $30.8 million and $32.6 million, respectively.

The 6% decrease of $1.8 million was primarily the result of:

• Harvest costs increased $1.0 million;

• Growing costs increased $0.6 million;

• Third-party grower and supplier costs decreased $3.5 million;

• Transportation costs increased $0.1 million.

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.

For the third quarter of fiscal years 2023 and 2022, our lemon packing segment total net revenues were $15.2 million and $16.0 million, respectively.

The 5% decrease of $0.8 million was primarily the result of decreased volume of lemons packed.

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

For the third quarter of fiscal years 2023 and 2022, our lemon packing costs and expenses were $13.1 million and $12.0 million, respectively.

The 10% increase of $1.1 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.

For the third quarter of fiscal years 2023 and 2022, lemon packing segment operating income per carton sold was $1.49 and $2.70, respectively.

In the third quarter of fiscal years 2023 and 2022, the lemon packing segment included $9.7 million of intersegment revenues that were charged to the fresh lemons segment to pack lemons for sale.

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

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

For the third quarter of fiscal years 2023 and 2022, our avocados segment had revenues of $3.5 million and $12.6 million, respectively.

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.

For the third quarter of fiscal years 2023 and 2022, our avocados segment costs and expenses were $3.0 million and $3.2 million, respectively.

The decrease of $0.2 million primarily consists of the following:

• Harvest costs decreased $0.7 million;

• Growing costs increased $0.5 million.

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.

For the third quarter of fiscal years 2023 and 2022, our other agribusiness segment total net revenues were $8.6 million and $4.9 million, respectively.

The 77% increase of $3.7 million was primarily the result of:

• Orange revenues decreased $2.4 million;

• Specialty citrus and other revenues increased $0.8 million;

• Farm management revenues for the third quarter of fiscal year 2023 were $5.4 million.

There were no farm management revenues in the third quarter 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.

For the third quarter of fiscal years 2023 and 2022, our other agribusiness costs and expenses were $7.9 million and $1.3 million, respectively.

The 515% increase of $6.6 million was primarily the result of:

• Harvest costs decreased $0.4 million;

• Growing costs increased $4.5 million;

• Purchased fruit costs increased $2.5 million.

Total agribusiness depreciation and amortization expenses for the third 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):

Our corporate and other operations had revenues of $1.4 million and $1.3 million for the third quarter of fiscal years 2023 and 2022, respectively.

Costs and expenses in our corporate and other operations for the third quarter of fiscal years 2023 and 2022 were approximately $6.9 million and $6.1 million, respectively, and include selling, general and administrative costs and expenses and loss on disposal of assets, net.

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

Nine Months Ended July 31, 2023, Compared to the Nine Months Ended July 31, 2022

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

Packing Eliminations

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Depreciation and amortization — — — — — 5,610 900 6,510

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 six months ended April 30, 2022 (in thousands):

Operating income $ 878 $ 8,331 $ — $ 3,012 $ 1,410 $ 8,021 $ 12,452 $ 20,473

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

Packing Eliminations

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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 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.

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

For the first nine months of fiscal years 2023 and 2022, our fresh lemons segment total net revenues were $94.9 million and $94.4 million, respectively.

The 1% increase of $0.5 million was primarily the result of:

• Fresh lemon sales decreased $4.2 million;

• Brokered lemons and other lemon sales increased $3.3 million;

• Legal settlement proceeds allocated to fresh lemons for the first nine months of fiscal year 2023 was $1.4 million.

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.

For the first nine months of fiscal years 2023 and 2022, our fresh lemons segment costs and expenses were $94.0 million and $92.0 million, respectively.

The 2% increase of $2.0 million was primarily the result of:

• 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.

• Harvest costs increased $1.7 million;

• Growing costs increased $1.8 million;

• Third-party grower and supplier costs decreased $3.6 million;

• Transportation costs increased $0.5 million;

• Intersegment costs and expenses increased $1.7 million.

Lemon Packing

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

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 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.

For the first nine months of fiscal years 2023 and 2022, our lemon packing segment total net revenues were $44.9 million and $44.7 million, respectively.

For the first nine months of fiscal years 2023 and 2022, our lemon packing costs and expenses were $36.6 million and $34.2 million, respectively.

The 7% increase of $2.4 million was primarily the result of increased labor and benefit costs.

For the first nine months of fiscal years 2023 and 2022, lemon packing segment operating income per carton sold was $1.98 and $2.47, respectively.

In the first nine months of fiscal years 2023 and 2022, the lemon packing segment included $27.4 million and $25.7 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 six months of fiscal year 2023 and 2022, our avocados segment had revenues of $3.6 million and $4.3 million, respectively.

For the first nine months of fiscal years 2023 and 2022, our avocados segment had revenues of $7.1 million and $16.9 million, respectively.

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

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.

For the first nine months of fiscal years 2023 and 2022, our avocados segment costs and expenses were $4.1 million and $5.5 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.

• Harvest costs decreased $0.9 million;

• Growing costs decreased $0.6 million.

Other Agribusiness

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.

For the first nine months of fiscal years 2023 and 2022, our other agribusiness segment total net revenues were $14.8 million and $10.7 million, respectively.

The 39% increase of $4.1 million was primarily the result of:

• 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.

• Orange revenues decreased $3.4 million;

• Specialty citrus and other revenues increased $0.7 million;

• Farm management revenues for the first nine months of fiscal year 2023 were $6.8 million.

There were no farm management revenues in the first nine months 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 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 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.

For the first nine months of fiscal years 2023 and 2022, our other agribusiness costs and expenses were $13.4 million and $7.7 million, respectively.

The 73% increase of $5.6 million was primarily the result of:

• Harvest costs decreased $1.2 million;

• Growing costs increased $1.7 million;

• Purchased fruit costs increased $5.1 million.

Total agribusiness depreciation and amortization expenses for the first nine months of fiscal years 2023 and 2022 were $5.6 million and $6.5 million, respectively.

Corporate and Other

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.

Our corporate and other operations had revenues of $4.2 million and $3.9 million for the first nine months of fiscal years 2023 and 2022, respectively.

Costs and expenses (gain) in our corporate and other operations for the first nine months of fiscal years 2023 and 2022 were approximately $(9.2) million and $19.7 million, respectively, and include selling, general and administrative costs and expenses, (gain) loss on disposal of assets, net and gain on legal settlement not allocated to the operating segments.

Depreciation and amortization expenses for the first nine months of fiscal years 2023 and 2022 were similar at $0.9 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 April 30, 2023 and 2022

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

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

Trailing Twelve Months Ended April 30,

Trailing Twelve Months Ended July 31,

Net revenues:

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Other (expense) income, net (3,688) 112

Total other (expense) income (4,065) 1,540

Total other expense (3,722) (13)

Income (loss) before income tax (provision) benefit 14,864 (2,375)

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Net income (loss) 9,889 (2,372)

Loss attributable to noncontrolling interest 275 405

Loss (income) attributable to noncontrolling interest 310 (78)

Net income (loss) attributable to Limoneira Company $ 10,199 $ (2,450)

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

• 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.

• Total revenues decreased $0.3 million, primarily the result of decreased avocados agribusiness revenues, partially offset by farm management agribusiness revenues.

• Total costs and expenses decreased $21.3 million, primarily the result of 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 $3.7 million, primarily the result of increased other expense related to pension settlement costs.

• Income tax provision increased $5.0 million, primarily the result of increased pre-tax income of $17.2 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 April 30, 2023, related to debt and leases.

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

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

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

We believe our revenue generating operations, distributions from equity investments and credit facilities will generate sufficient cash needed to operate beyond the next twelve months.

In addition, we have the ability to control a portion of our investing cash flows to the extent necessary based on our liquidity demands.

Cash Flows from Operating Activities

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 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.

For the nine months ended July 31, 2023, net cash used in operating activities was $12.6 million, compared to net cash provided by operating activities of $10.9 million for the nine months ended July 31, 2022.

The significant components of our cash flows (used in) provided by operating activities were as follows:

• Net income for the nine months ended July 31, 2023 and 2022 was $12.7 million and $2.3 million, respectively.

The components of net income in the nine months ended July 31, 2023, compared to the net income in the same period in fiscal year 2022 consist of an increase in operating income of $16.4 million, an increase in total other expense of $1.9 million and an increase in income tax provision of $4.2 million.

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

◦ Adjustments used $14.1 million and provided $11.9 million in the nine months ended July 31, 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 $11.1 million and $3.3 million of operating cash in the nine months ended July 31, 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 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.

For the nine months ended July 31, 2023 and 2022, net cash provided by (used in) investing activities was $92.4 million and $(5.3) million, respectively.

• The $92.4 million of cash provided by investing activities during the nine months ended July 31, 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 $9.0 million, primarily related to orchard and vineyard development.

• The $5.3 million of cash used in investing activities during the nine months ended July 31, 2022 was comprised primarily of capital expenditures of $7.7 million related to orchard and vineyard development and investments in mutual water companies and water rights of $0.5 million, partially offset by collection of note receivable of $2.8 million.

Cash Flows from Financing Activities

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.

For the nine months ended July 31, 2023 and 2022, net cash used in financing activities was $69.6 million and $4.8 million, respectively.

• The $69.6 million of cash used in financing activities during the nine months ended July 31, 2023 was comprised primarily of net repayments of long-term debt of $64.9 million and common and preferred stock dividends of $4.4 million.

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

Transactions Affecting Liquidity and Capital Resources

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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.

As of July 31, 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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We are also subject to a financial covenant that requires us to maintain compliance with a specified debt service coverage ratio greater than or equal to 1:25:1.0 on an annual basis.

We were in compliance as of October 31, 2022.

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

We were in compliance with the covenants as of October 31, 2022.

In September 2023, the Lender modified the covenant to defer measurement at October 31, 2023 and resume a debt service coverage ratio of 1.25:1.0 measured as of October 31, 2024.

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

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

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

Such preferred dividends paid were $0.3 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.

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

Such preferred dividends paid were $0.4 million in the nine months ended July 31, 2023 and 2022.

Cash dividends declared in the nine months ended July 31, 2023 and 2022 were $0.225 per common share and such dividends paid were $4.0 million in the nine months ended July 31, 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 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.

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

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis