What changed in this filing

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Item 1A. Risk Factors

2024-12-23 compared with 2023-12-21 · 39 added, 38 removed, 345 unchanged (18% of the section changed)

37 unchanged sentences

Due to the discovery of ACP in our orchards, we have experienced costs related to the quarantine and treatment of ACP.

In September 2023, two HLB-positive citrus trees were detected on one residential property in the City of Santa Paula, California.

In October 2023, the California Department of Food and Agriculture declared a mandatory five-mile-radius quarantine area, which includes approximately 1,100 acres of Limoneira-owned lemon orchards.

The quarantine area restricts the movement of citrus fruit, trees and related plant material subject to certain protocols.

Additional costs to spray insecticides on our orchards within the quarantine area are estimated to be $0.3 million to $0.4 million in fiscal year 2024.

There can be no assurance that HLB will not be detected on Limoneira orchards in the future.

In September 2023, two HLB-positive citrus trees were detected on a residential property in the City of Santa Paula, California.

Following this detection, the California Department of Food and Agriculture established a mandatory five-mile-radius quarantine area, encompassing approximately 1,100 acres of Limoneira-owned lemon orchards.

In July 2024, an additional 75 HLB-positive trees were detected on residential properties in the City of Santa Paula.

In response, the quarantine area was expanded in September 2024 to account for the new detections.

The quarantine restricts the movement of citrus fruit, trees, and related plant materials, subject to specific protocols.

The estimated additional costs to spray insecticides on our orchards within the quarantine area are $0.3 million to $0.4 million for fiscal year 2025.

There is no assurance that HLB will not be detected on Limoneira orchards in the future.

The costs to control these diseases and other infestations vary depending on the severity of the damage and the extent of the plantings affected.

5 unchanged sentences

Our earnings are sensitive to fluctuations in market supply and prices and demand for our products.

Excess supply often causes severe price competition in our industry.

Excess supply often causes severe price competition in our industry and the worldwide lemon market is currently in an over-supplied position.

Growing conditions in various parts of the world, particularly weather conditions such as windstorms, floods, droughts and freezes, as well as diseases and pests, are primary factors affecting market prices because of their influence on the supply and quality of product.

18 unchanged sentences

If the price of oil rises, the costs of our herbicides and pesticides can be significantly impacted.

The cost of paper is also significant to us because some of our products are packed in cardboard boxes for shipment.

The cost of paper is also significant to us because many of our products are packed in cardboard boxes for shipment.

If the price of paper increases and we are not able to effectively pass these price increases along to our customers, then our operating income will decrease.

6 unchanged sentences

Our labor contractors and we are subject to government mandated wage and benefit laws and regulations.

For example, the State of California, where a substantial number of our labor contractors are located, passed regulations that increased minimum wage rates from $15.00 per hour to $15.50 per hour, effective January 1, 2023, and will increase to $16.00 per hour in 2024 due to a cost-of-living increase provision found in the state's minimum wage law.

The State of Arizona wage rates rise each year based on the annual cost of living and increased from $12.80 per hour to $13.85 per hour, effective January 1, 2023, and will increase to $14.35 per hour in 2024.

For example, the State of California, where a substantial number of our labor contractors are located, passed regulations that will increase minimum wage rates to $16.50 per hour effective January 1, 2025 due to a cost-of-living increase provision in the state’s minimum wage law.

The State of Arizona minimum wage rates also rise each year based on the annual cost of living and will increase to $14.70 per hour effective January 1, 2025.

In addition, current or future federal or state healthcare legislation and regulation, including the Affordable Care Act, may increase our medical costs or the medical costs of our labor contractors that could be passed on to us.

6 unchanged sentences

Immigration laws have recently been an area of considerable focus by the Department of Homeland Security, with enforcement operations taking place across the country, resulting in arrests and detentions of unauthorized workers.

Termination of a significant number of personnel who are found to be unauthorized workers or the scarcity of available personnel to harvest our agricultural products could cause harvesting costs to increase or could lead to the loss of product that is not timely harvested, which could have a material adverse effect to our citrus grove operations, financial position, results of operations and cash flows.

Termination of a significant number of personnel who are found to be unauthorized workers or the scarcity of available personnel to harvest our agricultural products could cause harvesting costs to increase or could lead to the loss of product that is not timely harvested, which could have a material adverse effect to our citrus and avocado operations, financial position, results of operations and cash flows.

The lack of sufficient water would severely impact our ability to produce crops or develop real estate.

6 unchanged sentences

We use federal project water in Arizona from the Colorado River through the YMIDD.

We also have acquired water rights in Chile.

California experienced above average precipitation during the 2022 - 2023 rainfall season after experiencing three years of below average precipitation and drought conditions.

We also acquired water rights in Chile.

California received above average precipitation during the 2022 - 2023 and 2023 - 2024 rainfall seasons, after experiencing three years of below average precipitation and drought conditions.

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

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

As of October 31, 2024, the state was free from extreme 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.

In August 2021, the U.S.

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

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

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

In August 2023, the Bureau announced Lake Mead will operate in a Tier 1 shortage in 2024, which requires Arizona to forfeit approximately 18% of the state's yearly allotment of water from Lake Mead.

In response to these water shortages, we entered into fallowing agreements during fiscal years 2023 and 2022 and continue to assess the impact these reductions may have on our Arizona orchards.

For fiscal year 2023, irrigation costs for our agricultural operations were higher than fiscal year 2022.

In August 2023 and August 2024, the U.S.

Bureau of Reclamation announced that Lake Mead will operate in a Tier 1 shortage in 2024 and 2025, respectively, which requires Arizona to forfeit approximately 18% of the state’s yearly allotment of water from Lake Mead.

In response to this and prior years’ water shortages, we entered into fallowing agreements during fiscal years 2023 and 2022 and continue to assess the impact these ongoing reductions may have on our Arizona orchards.

For fiscal year 2024, irrigation costs for our agricultural operations were similar compared to fiscal year 2023.

Costs may increase as we pump more water than our historical averages and federal, state and local water delivery infrastructure costs may increase to access these limited water supplies.

We have an ongoing plan for irrigation improvements continuing in fiscal year 2024 that includes drilling new wells and upgrading existing wells and irrigation systems.

We have an ongoing plan for irrigation improvements continuing for fiscal year 2025 that includes drilling new wells and upgrading existing wells and irrigation systems.

We believe we have access to adequate supplies of water for our agricultural operations as well as our real estate development and rental operations and currently do not anticipate that future drought conditions will have a material impact on our operating results.

26 unchanged sentences

Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others.

We maintain product liability insurance, however we cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage.

We maintain product liability insurance;

however, we cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage.

We are subject to transportation risks.

13 unchanged sentences

Issues such as health and safety, which may slow or otherwise restrict imports and exports, could adversely affect our business.

In addition, the modification of existing laws or regulations or the introduction of new laws or regulations could require us to make material expenditures or otherwise adversely affect the way that we have historically operated our business.

Our strategy to expand international supply and marketing may not be successful and may subject us to risks associated with doing business in corrupt environments.

4 unchanged sentences

We depend on our infrastructure to have sufficient capacity to handle our annual lemon production needs.

We have an infrastructure that has sufficient capacity for our lemon production needs, but if we lose machinery or facilities due to natural disasters or mechanical failure, we may not be able to operate at a sufficient capacity to meet our lemon production needs.

Our infrastructure has sufficient capacity for our lemon production needs, but if we lose machinery or facilities due to natural disasters or mechanical failure, we may not be able to operate at a sufficient capacity to meet our lemon production needs.

This could have a material adverse effect on our business, which could impact our results of operations and our financial condition.

22 unchanged sentences

Our revolving and non-revolving credit facility with the AgWest Farm Credit Facility contain a financial covenant that requires us to maintain compliance with a specific debt service coverage ratio on an annual basis.

In September 2023, Farm Credit West, PCA (the “Lender”) modified the covenant to defer measurement as of October 31, 2023 and resume a debt service coverage ratio of 1.25:1.0 measured as of October 31, 2024.

At October 31, 2024 we were in compliance with the debt service coverage ratio of 1.25:1.0.

Our failure to comply with this covenant in the future may result in the declaration of an event of default under our AgWest Farm Credit Facility.

11 unchanged sentences

to fund early development activities.

Effective as of February 22, 2023, the Loan maturity date was extended to February 22, 2024, and the maximum borrowing amount was reduced to $35.0 million.

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

The obligations under the Loan are guaranteed by certain principals from Lewis and us.

Defaults by LLCB could increase our indebtedness.

Effective as of February 22, 2023, the maximum borrowing amount was reduced to $35.0 million.

The obligations under the Loan were guaranteed by certain principals from Lewis and us.

In May 2024, the Loan and corresponding guarantee were cancelled.

Our real estate development activities could require future loans that may result in future guarantees.

Some of our debt is based on variable rates of interest, which could result in higher interest expenses in the event of an increase in the interest rates.

3 unchanged sentences

Global capital and credit market issues affect our liquidity, increase our borrowing costs and may affect the operations of our suppliers and customers.

The global capital and credit markets have experienced increased volatility and disruption over the past several years, making it more difficult for companies to access those markets.

The global capital and credit markets experienced increased volatility and disruption over the past several years, making it more difficult for companies to access those markets.

We depend in part on stable, liquid and well-functioning capital and credit markets to fund our operations.

21 unchanged sentences

Any decrease in demand will negatively impact our proposed developments.

In 2023 and 2022, the Board of Governors of the Federal Reserve System took actions in tightening the monetary policy that resulted in higher interest rates prevailing in the marketplace.

Market interest rates may continue to increase in the future and the increase may materially and negatively affect us.

During 2023 and 2022, the Board of Governors of the Federal Reserve System took actions in tightening the monetary policy that resulted in higher interest rates prevailing in the marketplace.

During 2024, the Board of Governors of the Federal Reserve System took actions in easing the monetary policy by cutting interest rates.

Market interest rates may increase in the future and the increase may materially and negatively affect us.

Lack of available credit to finance real estate purchases can also negatively impact demand.

4 unchanged sentences

In addition, the zoning that ultimately is approved could include density provisions that would limit the number of homes and other structures that could be built within the boundaries of a particular area, which could adversely impact the financial returns from a given project.

In addition, in the past, many states, cities and counties (including Ventura County) have approved various “slow growth” or “urban limit line” measures.

In addition, in the past, many states, cities and counties (including Ventura County) approved various “slow growth” or “urban limit line” measures.

If unforeseen regulatory challenges with East Areas I and II occur, we may not be able to develop these projects as planned.

74 unchanged sentences

Currency exchange fluctuation may impact the results of our operations.

We distribute our products both nationally and internationally.

We distribute our products both nationally and internationally and have foreign subsidiaries with functional currencies besides the U.S.

Our international sales are primarily transacted in U.S.

Our results of operations are affected by fluctuations in currency exchange rates in both sourcing and selling locations.

Our results of operations are affected by fluctuations in currency exchange rates in both sourcing and selling locations and our foreign subsidiaries.

In the past, periods of a strong U.S.

dollar relative to other currencies have led international customers, particularly in Asia, to find alternative sources of fruit.

dollar relative to other currencies led international customers, particularly in Asia, to find alternative sources of fruit.

We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects .

23 unchanged sentences

We may be unable to successfully integrate businesses or the personnel of any business that might be acquired in the future, and our failure to do so could have a material adverse effect on our business and on the market price of our common stock.

Additionally, in fiscal year 2024 we recorded an impairment charge on our most recently acquired foreign subsidiary, and we may incur further impairment charges on this or other foreign subsidiaries in the future.

The value of our common stock could be volatile.

25 unchanged sentences

We incur increased costs as a result of being a publicly traded company.

As a company with publicly traded securities, we have incurred, and will continue to incur, significant legal, accounting and other expenses.

As a company with publicly traded securities, we incur, and will continue to incur, significant legal, accounting and other expenses.

In addition, the Sarbanes-Oxley Act of 2002, as well as rules promulgated by the SEC and NASDAQ, require us to adopt corporate governance practices applicable to U.S.

1 unchanged sentence

These rules and regulations may increase our legal and financial compliance costs, which could adversely affect the trading price of our common stock.

Unresolved Staff Comments

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 1A. Risk Factors