What changed in this filing

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Item 1A. Risk Factors

2025-12-23 compared with 2024-12-23 · 48 added, 63 removed, 321 unchanged (26% of the section changed)

Risks Related to Our Business Approach

We cannot assure you that our evaluation of potential strategic alternatives to enhance value for stockholders will be successful;

and there may be negative impacts on our business and stock price as a result of the process of exploring strategic alternatives.

On December 1, 2023, the Company announced the commencement of a process to explore strategic alternatives, which could include, but not be limited to, a sale of all or parts of the Company, merger or other transaction.

The Board has not set a timetable for the completion of this review process and there can be no assurance that it will result in any transaction or outcome.

Whether the process will result in any additional transactions, our ability to complete any transaction, and if our Board decides to pursue one or more transactions, will depend on numerous factors, some of which are beyond our control.

Such factors include the interest of potential acquirers or strategic partners in a potential transaction, the value potential acquirers or strategic partners attribute to our businesses and their respective prospects, market conditions, interest rates and industry trends.

Our stock price may be adversely affected if the evaluation does not result in additional transactions or if one or more transactions are consummated on terms that investors view as unfavorable to us.

Even if one or more additional transactions are completed, there can be no assurance that any such transactions will be successful or have a positive effect on stockholder value.

Our Board may also determine that no additional transaction is in the best interest of our stockholders.

In addition, our financial results and operations could be adversely affected by the strategic process and by the uncertainty regarding its outcome.

The attention of management and our Board could be diverted from our core business operations.

We have diverted capital and other resources to the process that otherwise could have been used in our business operations, and we will continue to do so until the process is completed.

We could incur substantial expenses associated with identifying and evaluating potential strategic alternatives, including those related to employee retention payments, equity compensation, severance pay and legal, accounting and financial advisor fees.

In addition, the process could lead us to lose or fail to attract, retain and motivate key employees, and to lose or fail to attract customers or business partners.

Furthermore, it could expose us to litigation.

The public announcement of a strategic alternative may also yield a negative impact on operating results if prospective or existing service providers are reluctant to commit to new or renewal contracts or if existing customers decide to move their business to a competitor.

We do not intend to disclose developments or provide updates on the progress or status of the strategic process until our Board deems further disclosure is appropriate or required.

Accordingly, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of the Company could cause our stock price to fluctuate significantly.

Risks Related to Our Agribusiness Operations

Our decision to merge our citrus sales and marketing operations into Sunkist Growers, Inc.

beginning November 1, 2025 may not be successful.

The merging of our citrus sales and marketing operations into Sunkist reduces our ability to exercise control over the sales and marketing of our lemons.

Sunkist marketing may be ineffective, which could result in decreased sales of citrus and, in particular, the sales of our lemons.

Insufficient resources committed by Sunkist to the sales and marketing of citrus may reduce the sales of our lemons and adversely affect our operations and financial results.

Consumer and institutional recognition of Sunkist trademarks and related brands and the association of these brands with high quality and safe citrus is an integral part of the Sunkist business.

The occurrence of any events or rumors that cause consumers and/or institutions to no longer associate those brands with high quality and safe citrus may materially affect the value of their brand names and the demand for fresh citrus.

As a Sunkist-licensed packinghouse, we are required to purchase the majority of our packing supplies from Fruit Growers Supply Company (“FGS”), a manufacturing and supply cooperative affiliated with Sunkist.

Increased costs for packing supplies from FGS or an extended interruption in the shipping of packing supplies could negatively affect our operating income.

Sunkist cybersecurity risks, data protection breaches, cyber-attacks and system integration issues could disrupt Sunkist internal operations or services provided to end customers, and such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our business.

Adverse weather conditions, natural disasters, including earthquakes and wildfires, and other natural conditions, including the effects of climate change, could impose significant costs and losses on our business.

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ACP is a federal action quarantine pest subject to interstate and international quarantine restrictions by the United States Department of Agriculture (“USDA”), including a prohibition on the movement of nursery stock out of quarantine areas and a requirement that all citrus fruit be cleaned of leaves and stems prior to movement out of the quarantine area.

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

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

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.

In July 2024, additional 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 and is still in effect.

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

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These infestations can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition.

Our strategy of marketing and selling our lemons directly to our food service, wholesale and retail customers may not continue to be successful.

Directly obtaining and retaining customers, particularly chain stores and other large customers, is highly competitive, and the prices or other terms of our sales arrangements may not be sufficient to retain existing business, maintain current levels of profitability or obtain new business.

Industry consolidation (horizontally and vertically) and other factors have increased the buying leverage of the major grocery retailers in our markets, which may put further downward pressure on our pricing and volume and could adversely affect our results of operations.

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

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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.

The COVID-19 pandemic also reduced the demand for our products resulting in excess supply.

Fresh produce is highly perishable and generally must be brought to market and sold soon after harvest.

Some items, such as avocados and oranges, must be sold more quickly, while other items, such as lemons, can be held in cold storage for longer periods of time.

Some items, such as avocados, must be sold more quickly, while other items, such as lemons, can be held in cold storage for longer periods of time.

The selling price received for each type of produce depends on all of these factors, including the availability and quality of the produce item in the market and the availability and quality of competing types of produce.

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The State of Arizona minimum wage rates also rise each year based on the annual cost of living and will increase to $15.15 per hour effective January 1, 2026.

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.

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

Changes in immigration laws could impact the ability of Limoneira to harvest its crops.

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Congress and the Department of Homeland Security from time to time consider and may implement changes to federal immigration laws, regulations or enforcement programs.

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.

Immigration laws have recently been an area of considerable focus by the Department of Homeland Security, with enforcement operations taking place across the country and specifically within Ventura County, 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 and avocado operations, financial position, results of operations and cash flows.

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

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, 2024, the state was free from extreme drought conditions and Ventura County was free from any drought conditions.

Southern California experienced below average precipitation for the 2024 to 2025 rainfall season.

As of October 31, 2025, Ventura County was experiencing moderate drought conditions.

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

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.

In August 2025, the U.S.

Bureau of Reclamation announced that Lake Mead will continue to operate in a Tier 1 shortage in 2026, 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 2022 and 2023 and in February 2025, extended an existing fallowing agreement through calendar year 2026.

We continue to assess the impact these ongoing water reductions may have on our Arizona orchards.

For fiscal year 2025, irrigation costs for our agricultural operations decreased compared to fiscal year 2024.

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 for fiscal year 2025 that includes drilling new wells and upgrading existing wells and irrigation systems.

We have an ongoing plan for irrigation improvements continuing for fiscal year 2026 that includes 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.

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We are subject to transportation risks.

An extended interruption in our ability to ship our products could have a material adverse effect on our business, financial condition and results of operations.

An extended interruption in the shipping of our products could have a material adverse effect on our business, financial condition and results of operations.

Similarly, any extended disruption in the distribution of our products or supply chain issues could have a material adverse effect on our business, financial condition and results of operations.

While we believe we are adequately insured and would attempt to transport our products by alternative means if we were to experience an interruption due to strike, natural disasters or otherwise, we cannot be sure that we would be able to do so or be successful in doing so in a timely and cost-effective manner.

Events or rumors relating to LIMONEIRA or our other trademarks and related brands could significantly impact our business.

Consumer and institutional recognition of the LIMONEIRA, One World of Citrus®, Santa®, Paula®, Bridal Veil®, Fountain®, Golden Bowl®, Level®, Kiva®, Kachina®, Oxnard Lemon and Trapani Fresh trademarks and related brands and the association of these brands with high quality and safe food products are an integral part of our business.

Events or rumors relating to LIMONEIRA or our other trademarks and related brands or Sunkist could significantly impact our business.

Consumer and institutional recognition of the LIMONEIRA, Sunkist, One World of Citrus®, Santa®, Paula®, Bridal Veil®, Fountain®, Golden Bowl®, Level®, Compass®, Pitcher®, Kiva®, Kachina®, Oxnard Lemon and Trapani Fresh trademarks and related brands and the association of these brands with high quality and safe food products are an integral part of our business.

The occurrence of any events or rumors that cause consumers and/or institutions to no longer associate these brands with high quality and safe food products may materially adversely affect the value of our brand names and demand for our products.

Government regulation could increase our costs of production and increase legal and regulatory expenses.

Government regulation could increase our production costs and increase legal and regulatory expenses.

Growing, packaging, storing and distributing food products are activities subject to extensive federal, state and local regulation, as well as foreign regulation.

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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 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.

While we intend to expand our lemon supply sources to international markets and explore opportunities to expand our marketing of lemons, we may not be successful in implementing this strategy.

Additionally, in many countries outside of the United States, particularly in those with developing economies, it may be common for others to engage in business practices prohibited by laws and regulations applicable to us, such as the Foreign Corrupt Practices Act or similar local anti-bribery laws.

These laws generally prohibit companies and their employees, contractors or agents from making improper payments to government officials for the purpose of obtaining or retaining business.

Failure to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our financial condition and results of operations.

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

Our infrastructure has sufficient capacity for our lemon production needs, but if we lose machinery or facilities due to natural disasters, accidents 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.

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Restrictive covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a variety of transactions, which could adversely restrict our financial and operating flexibility and subject us to other risks.

Our revolving and non-revolving credit and term loan facilities contain various restrictive covenants that limit our ability to take certain actions.

Our revolving and non-revolving credit facilities contain various restrictive covenants that limit our ability to take certain actions.

In particular, these agreements limit our ability to, among other things:

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• transfer and sell assets.

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.

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

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.

In September 2025, the Lender modified the annual debt service coverage ratio covenant to defer measurement as of October 31, 2025.

In December 2025, the Lender modified the annual debt service coverage ratio covenant to defer measurement as of October 31, 2026 and resume a debt service coverage ratio of 1.25:1.0 measured as of October 31, 2027 and for any fiscal year ending thereafter.

We were also subject to a quarterly financial covenant that required us to maintain compliance with a specific total net leverage ratio as of the end of any fiscal quarter beginning July 31, 2026.

In December 2025, the Lender modified this quarterly financial covenant to defer measurement through July 31, 2027 and resume measurement as of October 31, 2027.

Additionally, in December 2025, the Lender added a new quarterly financial covenant effective for the period from January 31, 2026 through July 31, 2027 which requires us to maintain a specific debt to capitalization ratio.

Any or all of these covenants could have a material adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition or other corporate opportunities and to fund our operations.

Any future debt could also contain financial and other covenants more restrictive than those imposed under our line of credit and term loan facilities.

Any future debt could also contain financial and other covenants more restrictive than those imposed under our line of credit facilities.

A breach of a covenant or other provision in any credit facility governing our current and future indebtedness could result in a default under that facility and, due to cross-default and cross-acceleration provisions, could result in a default under our other credit facilities.

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We bear the risk that the rates we are charged by our lender will increase faster than the earnings and cash flow of our business, which could reduce profitability, adversely affect our ability to service our debt, cause us to breach covenants contained in our AgWest Farm Credit Facility, which could materially adversely affect our business, financial condition and results of operations.

Our Company’s debt agreement with AgWest Farm Credit used LIBOR as a reference rate, which was converted to the Secure Overnight Financing Rate (“SOFR”) on January 1, 2023.

Our Company’s debt agreement with AgWest Farm Credit uses the Secure Overnight Financing Rate (“SOFR”).

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

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Any decrease in demand will negatively impact our proposed developments.

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.

During 2025 and 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.

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

Additionally, a voter-approved initiative may prevent us from developing the Limco Del Mar ranch.

Third-party litigation could increase the time and cost of our real estate development efforts.

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Accordingly, we have and may continue to incur substantial indebtedness to finance our real estate development and land development activities.

Although we believe that internally generated funds and current and available borrowing capacity will be sufficient to fund our capital and other expenditures, including additional land acquisition, development and construction activities, and the amounts available from such sources, may not be adequate to meet our needs.

Although we believe that internally generated funds and current and available borrowing capacity will be sufficient to fund our capital and other expenditures, including development and construction activities, and the amounts available from such sources, may not be adequate to meet our needs.

If such sources were insufficient, we would seek additional capital in the form of debt from a variety of potential sources, including bank financing.

The availability of borrowed funds to be used for additional land acquisition, development and construction may be greatly reduced, and the lending community may require increased amounts of equity to be invested in a project by borrowers in connection with new loans.

The availability of borrowed funds to be used for development and construction may be greatly reduced, and the lending community may require increased amounts of equity to be invested in a project by borrowers in connection with new loans.

The failure to obtain sufficient capital to fund our planned expenditures could have a material adverse effect on our business and operations and our results of operations in future periods.

We may encounter risks associated with the real estate joint ventures we entered into in November 2015 and October 2022 with the Lewis Group of Companies including:

We may encounter risks associated with the real estate joint ventures we have with the Lewis Group of Companies, including:

• the joint ventures may not perform financially or operationally as expected;

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Many companies compete in our different businesses.

However, only a few well-established companies operate on an international, national and regional basis with one or several product lines.

We face strong competition from these and other companies in all our product lines.

Important factors with respect to our competitors include the following:

• Some of our competitors may have greater operating flexibility and, in certain cases, this may permit them to respond better or more quickly to changes in the industry or to introduce new products and packaging more quickly and with greater marketing support.

• Some of our competitors may have greater operating flexibility and, in certain cases, this may permit them to respond better or more quickly to changes in the industry.

• We cannot predict the pricing or promotional actions of our competitors or whether those actions will have a negative effect on us.

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Currency exchange fluctuation may impact the results of our operations.

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

Our products are distributed both nationally and internationally and we have foreign subsidiaries with functional currencies besides the U.S.

Our international sales are primarily transacted in U.S.

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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.

Additionally, in fiscal year 2024 and 2025 we recorded an impairment charge and reserves on our most recently acquired foreign subsidiary, and we may incur further impairment charges or reserves on this or other foreign subsidiaries in the future.

The value of our common stock could be volatile.

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The risks described here are not the only ones we will face.

If any of these risks or other risks actually occurs, our business, financial condition, results of operations or future prospects could be materially and adversely affected.

If any of these risks or other risks actually occur, our business, financial condition, results of operations or future prospects could be materially and adversely affected.

In such event, the trading price of our common stock could decline and investors in our common stock could lose all or part of their investment.

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• fluctuations in the stock prices of our peer companies or in stock markets in general;

• our decision to pay dividends at the current rate;

• general economic or political conditions.

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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 1A. Risk Factors