What changed in this filing

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Item 1. Business

2024-12-23 compared with 2023-12-21 · 42 added, 76 removed, 246 unchanged (32% of the section changed)

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Agribusiness activities are performed through these four reporting segments:

We are one of California’s oldest citrus growers.

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.

We have agricultural plantings throughout Ventura and San Luis Obispo in California and Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 3,500 acres of lemons, 1,200 acres of avocados, 100 acres of oranges and 400 acres of wine grapes.

We are one of California’s oldest citrus growers and are one of the largest growers of lemons in the United States.

According to the California Avocado Commission, we are one of the largest growers of avocados in the United States.

In addition to growing lemons and avocados, we grow oranges and wine grapes.

We have agricultural plantings throughout Ventura and San Luis Obispo Counties in California, Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 3,400 acres of lemons, 1,400 acres of avocados, 100 acres of oranges and 400 acres of wine grapes.

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

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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.

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

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

For more than 100 years, we have been making strategic investments in California agriculture and real estate.

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Fiscal Year 2024 Highlights and 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 January 25, 2023, when the Board of Directors (the “Board”) 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.

The proceeds were used primarily to pay down debt.

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

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

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

During the three months ended January 31, 2023, the Company made funding contributions of $2.5 million to fully fund and settle the plan obligations of the Limoneira Company Retirement Plan.

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

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

On November 30, 2022, we sold our Sevilla property, received net proceeds of $2.6 million and recorded an immaterial loss in the first quarter of fiscal year 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 $9.0 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 Citrus Packers, Inc.

(“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.

In October 2023, Limoneira Lewis Community Builders, LLC (“LLCB”) closed on lot sales representing 121 residential units and we recorded equity in earnings of investments of $5.1 million for fiscal year 2023.

On December 1, 2023, we announced the commencement of a strategic review process to explore potential alternatives aimed at maximizing stockholder value.

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At this time, we cannot predict the impact that such strategic alternatives might have on our business, operations or financial condition.

On December 19, 2023, we declared a cash dividend of $0.075 per common share to be paid on January 12, 2024, in the aggregate amount of approximately $1.3 million to stockholders of record as of January 2, 2024.

In December 2023, we sold 12 acres of real property located in Yuma, Arizona for a sales price of $0.8 million.

After transaction and closing costs, we recorded a gain on sale of approximately $0.2 million.

In April 2024, the Company conducted an organization restructuring resulting in severance benefit costs of approximately $1.2 million.

On April 30, 2024, our real estate development joint venture with The Lewis Group of Companies (“Lewis”) closed an additional 554 residential homesites at the Harvest at Limoneira master planned community in Santa Paula, CA (“Harvest”) and we recorded equity in earnings of investments of $16.6 million in the second quarter of fiscal year 2024.

On June 5, 2024, we received a cash distribution of $15.0 million from the joint venture.

On May 7, 2024, it was announced that the Santa Paula City Council approved the proposal brought by the Company’s real estate development joint venture with Lewis to increase the number of entitled lots at Harvest from 1,500 dwelling units to 2,050 dwelling units.

The Santa Paula City Council approved an amendment allowing for the 550-unit increase on April 3, 2024.

The 550-unit increase will provide 250 additional single family for-sale homesites within Phase 3 of Harvest.

Additionally, the Company in partnership with Lewis plans to construct 300 multi-family rental homes on a mixed-use portion of the project.

On December 17, 2024, we declared a cash dividend of $0.075 per common share payable on January 15, 2025, in the aggregate amount of approximately $1.4 million to common stockholders of record as of December 30, 2024.

COVID-19 Pandemic

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

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

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

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

In particular, the export market for fresh produce significantly declined due to the COVID-19 pandemic impacts.

The decline in demand for our products beginning the second quarter of fiscal year 2020 negatively impacted our sales and profitability and may impact our sales and profitability in future periods.

The duration of these trends and the magnitude of such impacts cannot be estimated at this time, as they are influenced by a number of factors, many of which are outside management’s control, including, but not limited, to those presented in Item 1A.

Risk Factors of this Annual Report.

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.

economy and the ongoing business operations of our customers.

The ongoing impact of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for fiscal year 2024 and beyond cannot be estimated at this point.

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

Business Division Summary

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The agribusiness division is comprised of four reportable operating segments:

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

fresh lemons, lemon packing, avocados and other agribusiness, which primarily 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.

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Agribusiness Summary

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

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

We are one of the largest lemon growers in the United States with approximately 3,400 acres of lemons planted primarily in Ventura County, California and in Yuma County, Arizona.

Ventura County is California’s top lemon producing county.

Approximately 55% of our lemons are grown in Ventura County and 24% are grown in Yuma County.

We also grow approximately 21% of our lemons near La Serena, Chile.

There are many varieties of lemons, with the Lisbon, Eureka and Genoa being the predominant varieties marketed on a worldwide basis.

There are many varieties of lemons, with the Lisbon, Eureka and Genoa varieties being the predominant varieties marketed on a worldwide basis.

Approximately 99% of our lemon plantings are of the Lisbon, Eureka and Genoa varieties and approximately 1% are of other varieties such as sweet Meyer lemons and Proprietary Seedless lemons.

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The storage life of fresh avocados generally ranges from one to four weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain.

Through fiscal year 2021, the Company sold the majority of its avocado production to Calavo Growers, Inc.

(“Calavo”), a packing and marketing company listed on the NASDAQ Global Select Market under the symbol CVGW.

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

Primarily related to differing soil conditions, the care of avocado trees is intensive.

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Other Agribusiness.

We have approximately 100 acres of oranges planted near La Serena, Chile.

Approximately 72% of our orange plantings are of the Navel variety and approximately 28% are of the Valencia variety.

We have approximately 400 acres of wine grapes.

Additionally, we provide farm management services, which include farming, management and operations services mainly related to the Northern Properties.

Prior to the Northern Properties sale, we utilized third-party packinghouses to process and pack our oranges.

A portion of our oranges was marketed and sold under the Sunkist brand by Sunkist and orders were processed by Sunkist-member packinghouses.

As an agricultural cooperative, Sunkist coordinated the sales and marketing of the oranges and specialty citrus and orders were processed by Sunkist-member packinghouses for direct shipment to customers.

We have approximately 100 acres of oranges planted near La Serena, Chile, and 400 acres of wine grapes planted in San Luis Obispo County, California.

We currently market our wine grapes utilizing processors that are not members of agricultural cooperatives.

Our wine grapes are harvested and sold to various wine producers.

Additionally, we provide farm management services, which include farming, management and operations services mainly related to the Northern Properties.

We have agricultural plantings on properties located in the United States, Chile and Argentina.

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Total 10,500 3,400 1,400 100 400 5,200

Percentage of Total 100 % 33 % 11 % 1 % 4 % 51 %

The Limoneira/Olivelands Ranch is the original site of our Company.

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Our orchards can maintain production for many years.

For financial reporting purposes, we depreciate our orchards from 20 to 40 years depending on the fruit variety with the majority of our orchards depreciated over 20 to 30 years.

For financial reporting purposes, we depreciate our orchards from 20 to 30 years depending on the fruit variety.

We regularly evaluate our orchards’ production and growing costs and based on these and other factors, we may decide to redevelop certain orchards.

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We also partner with one of our tenants and have an organic recycling facility on our land in Ventura County.

Effective November 1, 2021, we also lease our 1,200-acre Santa Clara ranch in Argentina.

Effective November 1, 2021, we lease our 1,200-acre Santa Clara ranch in Argentina.

Real Estate Development Summary

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East Area I - Santa Paula, California.

East Area I consists of 523 acres that we historically used as agricultural land and is located in Santa Paula approximately ten miles from the City of Ventura and the Pacific Ocean.

This property was formerly known as our Teague McKevett Ranch.

East Area I consists of approximately 500 acres that we historically used as agricultural land and is located in Santa Paula approximately ten miles from the City of Ventura and the Pacific Ocean.

East Area I is the location for our master planned community of commercial and residential properties, named Harvest at Limoneira , designed to satisfy expected demand in a region that we believe will have few other developments in this coming decade.

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We formed LLCB II, LLC as the development entity, contributed our Retained Property to the joint venture and sold a 50% interest to Lewis for approximately $8.0 million.

In connection with the closing, we amended LLCB’s Limited Liability Company Agreement to provide that LLCB is to include the processing of final approval for additional residential units to be developed and constructed on the Retained Property.

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

Since inception, each partner has made funding contributions of $21.4 million to LLCB and $1.0 million to LLCB II.

We expect to receive approximately $123.0 million from LLCB, LLCB II and East Area II over the next seven years of the projects.

In June 2024, we received a cash distribution of $15.0 million from LLCB and we expect to receive approximately $165.0 million from LLCB, LLCB II and East Area II over the next six years of the projects.

East Area II - Santa Paula, California.

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The following is a brief list of what we believe are our significant competitive strengths with respect to our agribusiness operations:

• Our agricultural properties in Ventura County are located near the Pacific Ocean, which provides an ideal environment for growing lemons, avocados and row crops.

• Our agricultural properties in Ventura County are located near the Pacific Ocean, which provides an ideal environment for growing lemons and avocados.

Our agricultural properties in Yuma, Arizona, are also located in an area that is well-suited for growing citrus crops.

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• We have contiguous and nearby land resources that permit us to efficiently use our agricultural land and resources.

• In all but one of our properties, we are not dependent on State or Federal water projects to support our agribusiness or real estate development operations.

• We are not dependent on State or Federal water projects for our agribusiness or real estate development operations in California.

• We own a majority of our agricultural land and take a long view on our fruit production practices.

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• Our lemon packing operations provide marketing opportunities with other citrus companies and their respective products.

• We have made investments in ground-based solar projects that provide us with tangible and intangible non-revenue generating benefits.

• We made investments in ground-based solar projects that provide us with tangible and intangible non-revenue generating benefits.

The electricity generated by these investments provides us with a significant portion of the electricity required to operate our packinghouse and cold storage facilities located in Santa Paula, California.

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Moreover, electricity that we generate and do not use is conveyed back to the utility companies.

Finally, over time, we expect that our customers and the end consumers of our fruit will value the investments that we have made in renewable energy as a part of our packing operations, which we believe may help us differentiate our products from similar commodities.

• We have made various other investments in water rights and mutual water companies.

Finally, over time, we expect that our customers and the end consumers of our fruit will value the investments that we made in renewable energy as a part of our packing operations, which we believe may help us differentiate our products from similar commodities.

• We made various other investments in water rights and mutual water companies.

We own shares in the following mutual water companies:

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• We have entitlements to build approximately 2,050 residential units in our East Area I development.

• We have partnered with an experienced and financially strong land developer for our East Area I residential master plan development.

• We partnered with an experienced and financially strong land developer for our East Area I residential master plan development.

• Several of our agricultural and real estate investment properties are unique and carry longer-term development potential.

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◦ Marketing and distributing brokered fruit.

We intend to strategically sell certain assets to reduce existing debt, increase farming efficiencies and expand packing capabilities.

We intend to continue to strategically sell certain assets to reduce existing debt, increase farming efficiencies and expand packing capabilities.

Increased volume of fruit sales is expected to be fueled by sourcing from third-party growers and suppliers, thus mitigating the volatility that commodity pricing has on growers.

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Of most importance is the overall fresh utilization rate for our fruit, which is directly related to quality.

• Expand our Plantings of Avocados .

Our plantings of avocados have been profitable and historically have been pursued to diversify our product line.

We plan to expand our avocado production by 1,000 acres through fiscal year 2027 to capitalize on robust consumer demand trends.

• Expand International Sales and Marketing of Lemons .

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We have the ability to supply a wide range of customers and markets and, because we produce high quality lemons, we can export our lemons to international customers, which many of our competitors are unable to supply.

• Opportunistically Expand our Plantings of Avocados .

Our plantings of avocados have been profitable and have been pursued to diversify our product line.

Agricultural land that we believe is not suitable for lemons is typically planted with avocados or other crops.

While we expand our avocado plantings, we expect to do so on an opportunistic basis in locations that we believe offer a record of historical profitability.

Other Operations

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We thus intend to maintain our position as a responsible agricultural landowner and major employer in Ventura County while focusing our real estate development activities on those agricultural land parcels that we believe offer the best opportunities to demonstrate our long-term vision for our community.

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

We sold lemons to approximately 190 U.S.

We market and sell our lemons directly to our food service, wholesale and retail customers in the United States, Canada, Asia, and certain other international markets.

We sold lemons and other citrus to 194 U.S.

and international customers during fiscal year 2024.

We sell our avocados and oranges to third-party packinghouses and our wine grapes to wine producers.

We sell our avocados to third-party packinghouses and our wine grapes to wine producers.

The agribusiness crop markets are intensely competitive, but no single producer has any significant market power over any market segments, as is consistent with the production of most agricultural commodities.

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In the purest sense, our largest competitors in our agribusiness segments are other citrus and avocado producers in California, Mexico, Chile, Argentina and Florida, a number of which are members of cooperatives such as Sunkist or have selling relationships with third-party packinghouses similar to that of Limoneira.

Our lemons and oranges also compete with other fruits and vegetables for the share of consumer expenditures devoted to fresh fruit and vegetables:

Our lemons and other citrus also compete with other fruits and vegetables for the share of consumer expenditures devoted to fresh fruit and vegetables:

apples, pears, melons, pineapples and other tropical fruit.

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For our specific crops, the size of the 2023 U.S.

market is approximately $586 million for lemons, both fresh and juice, approximately $500 million for avocados, and approximately $1.5 billion for oranges, both fresh and juice.

market was approximately $615 million for lemons, both fresh and juice, approximately $250 million for avocados, and approximately $985 million for oranges, both fresh and juice.

Competition in the various agribusiness markets is affected by reliability of supply, product quality, brand recognition and perception, price and the ability to satisfy changing customer preferences through innovative product offerings.

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As with any agribusiness enterprise, our agribusiness operations are predominantly seasonal in nature.

The harvest and sale of our lemons, avocados, oranges and other crops occurs in all quarters, but is generally more concentrated during our third quarter.

The harvest and sale of our lemons, avocados and oranges occurs in all quarters, but is generally more concentrated during our third quarter.

Our lemons are generally grown and marketed throughout the year, our avocados are primarily sold from January through August and our wine grapes are primarily sold in September and October.

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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-K

Item 1. Business