Limoneira CO 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Limoneira Company, a Delaware corporation, is the successor to several businesses with operations in California since 1893. We are primarily an agribusiness company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 7,000 acres of land, water resources and other assets to maximize long-term stockholder value. Our current operations consist of fruit production and packing operations, rental operations, real estate and capital investment activities. We are one of California’s oldest lemon growers and 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 wine grapes. We have agricultural plantings throughout Ventura and San Luis Obispo Counties in California, Yuma County in Arizona and Jujuy, Argentina, which collectively consist of approximately 2,400 acres of lemons, 1,600 acres of avocados and 400 acres of wine grapes. We also operate our own packinghouses in Santa Paula, California and Yuma, Arizona, where we process and pack lemons that we grow, as well as lemons grown by others. We have a 51% interest in a joint venture, Trapani Fresh Consorcio de Cooperacion (“Trapani Fresh”), a lemon orchard in Argentina. We have a 47% interest in Rosales S.A. (“Rosales”), a citrus packing, marketing and sales business located near La Serena, Chile. We have a 90% interest in Fruticola Pan de Azucar S.A. (“PDA”) and a 100% interest in Agricola San Pablo, SpA (“San Pablo”). Through November 7, 2025, these entities owned lemon and orange orchards located near La Serena, Chile. Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own. Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers). We also use surface water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District (“YMIDD”). We use ground water provided by wells and surface water for our Trapani Fresh farming operations in Argentina. For more than 100 years, we have been making strategic investments in California agriculture and real estate. We currently have an interest in three real estate development projects in California. These projects include multi-family housing, single-family homes and apartments of approximately 800 units in various stages of planning and development, as well as entitlement efforts related to Ventura County farmland. Business Division Summary We have three business divisions: agribusiness, rental operations and real estate development. The agribusiness division is comprised of four reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness, which primarily includes oranges, specialty citrus and wine grapes. The agribusiness division includes our core operations of farming, harvesting and lemon packing operations. The rental operations division includes our residential and commercial rentals, leased land operations and organic recycling. The real estate development division includes our investments in real estate development projects. Generally, we see our Company as a land and farming company that generates annual cash flows to support our progress into diversified real estate development activities. 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 In June 2025, Limoneira entered into a Commercial Packinghouse License Agreement with Sunkist Growers, Inc., a nonprofit marketing cooperative (“Sunkist” and the “Sunkist Agreement”), effective as of November 1, 2025. The agreement permits us to grade, label, pack, prepare for marketing by Sunkist and ship Sunkist grower lemons, and to use Sunkist trademarks in these activities. The agreement has an initial term of three years with automatic one-year extensions. As of November 1, 2025, Sunkist performs the Company’s lemon sales and marketing operations. Prior to November 1, 2025, the Company marketed and sold citrus directly to food service, wholesale and retail customers throughout the United States, Canada, Asia and certain other international markets. We sell our avocados to third-party packinghouses and our wine grapes to wine producers. Historically, our agribusiness division has been seasonal in nature, with quarterly revenues fluctuating depending on the timing and variety of crops being harvested. Cultural costs, also referred to as growing costs, in our agribusiness division tend to be higher in the first and second quarters and lower in the third and fourth quarters because of the timing of expensing cultural costs in the current year that were inventoried in the prior year. Our harvest costs generally increase in the second quarter and peak in the third quarter, coinciding with increased production. Lemon revenues are expected to be lower in the first and second quarters and higher in the third and fourth quarters in connection with the Sunkist Agreement. 26 Fluctuations in price are a function of global supply and demand with weather conditions, such as unusually low temperatures, typically having the most dramatic effect on the amount of lemons supplied in any individual growing season. We believe we have a competitive advantage by maintaining our own lemon packing operations, even though a significant portion of the costs related to these operations are fixed. As a result, cost per carton is a function of fruit throughput. While we regularly monitor our costs for redundancies and opportunities for cost reductions, we also supplement the number of lemons we pack in our packinghouse with additional lemons procured from other growers. 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 plantings have been profitable and historically were pursued to diversify our product line. Since fiscal year 2023, we expanded our avocado production by 800 acres, and we plan to expand an additional 200 acres through fiscal year 2027. This 1,000-acre expansion reflects our strategy to capitalize on robust consumer demand trends for avocados. In addition to growing lemons and avocados, we grow wine grapes. We regularly monitor the demand for the fruit we grow in the current marketplace to identify trends. Rental Operations Summary Our rental operations include our residential and commercial rentals, leased land operations and organic recycling. Our residential and commercial rentals generate cash flows that we use to partially fund the operating costs of our business. In addition, our leased land business provides us with a profitable method to diversify the use of our land. Revenue from rental operations is generally level throughout the year. Real Estate Development Summary We invest in real estate investment projects and recognize that long-term strategies are required for successful real estate development activities. For real estate development projects and joint ventures, it is not unusual for the timing and amounts of revenues and costs, partner contributions and distributions, project loans, other financing assumptions and project cash flows to be impacted by government approvals, project revenue and cost estimates and assumptions, economic conditions, financing sources and product demand as well as other factors. Such factors could affect our results of operations, cash flows and liquidity. Water and Mineral Rights Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own. We believe we have adequate supplies of water for our agribusiness segments as well as our rental and real estate development activities. Water for our farming operations located in Ventura County, California is sourced from the existing water resources associated with our land, which includes approximately 8,500 acre-feet of water rights in the adjudicated Santa Paula Basin (aquifer) and additional rights in the un-adjudicated Fillmore Basin (aquifer). 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 farming operations in Yuma, Arizona source water from the Colorado River through the YMIDD, where we have access to approximately 11,500 acre-feet of Class 3 Colorado River water rights. We use ground water provided by wells and surface water for our Trapani Fresh farming operations in Argentina and used ground water provided by wells and surface water for our PDA and San Pablo farming operations in La Serena, Chile. Southern California is experiencing above average precipitation for the 2025 to 2026 rainfall season. As of January 31, 2026, Ventura County was free from general drought conditions. We continue to assess the impact drought conditions may have on our California orchards. 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. 27 Recent Developments On June 6, 2025, we entered into a Commercial Packinghouse License Agreement with Sunkist Growers, Inc., a nonprofit marketing cooperative, effective as of November 1, 2025. The agreement permits us to grade, label, pack, prepare for marketing by Sunkist and ship Sunkist grower lemons, and to use Sunkist trademarks in these activities. The agreement has an initial term of three years with automatic one-year extensions. As of November 1, 2025, Sunkist performs the Company’s lemon sales and marketing operations. On November 7, 2025, our Chilean subsidiaries, PDA and San Pablo (collectively, the “Sellers”), each entered into a Purchase and Sale Agreement and Novation Agreement (collectively, the “Purchase Agreements”) with San Pedro, SpA, a Chilean joint stock company (the “Buyer”), to sell certain real estate parcels consisting of approximately 500 acres of lemons, 100 acres of oranges and other unplanted lands including water rights associated with the parcels for an aggregate purchase price of $15.0 million. The transactions closed upon transfer of the deeds simultaneously with the execution of the Purchase Agreements. After a period of approximately 120 days to record the transactions, which is customary in Chilean real estate transactions, the Buyer will make an initial payment to the Sellers in the aggregate amount of $6.8 million, of which approximately $0.7 million will be deferred until certain requirements have been fulfilled. The remainder of the Buyer’s payment obligations, in the aggregate amount of $8.2 million, will be made in installment payments in amounts that will be calculated based on the excess free cash flows of the combined operations of the sold properties and a third citrus ranch owned by the Buyer, measured annually as of March 31 until the remaining balance is paid in full (the “Balance Payments”). Following the final Balance Payment, the Buyer will also make an additional payment, in an amount equal to 50% of the prior year’s Balance Payment. The Buyer’s payment obligations are secured by a pledge on its corporate equity interests in favor of the Sellers. The Company recorded an immaterial gain on the disposal of assets. On December 16, 2025, we declared a cash dividend of $0.075 per common share paid on January 16, 2026, in the aggregate amount of $1.4 million to common stockholders of record as of December 30, 2025. 28 Results of Operations The following table shows the results of operations (in thousands): Three Months Ended January 31, 2026 2025 Net revenues: Agribusiness $ 16,756 $ 32,852 Other operations 1,449 1,453 Total net revenues 18,205 34,305 Costs and expenses: Agribusiness 23,019 33,499 Other operations 1,071 1,171 Gain on sales of water rights — (1,488) Loss (gain) on disposal of assets, net 73 (6) Selling, general and administrative 4,593 6,475 Total costs and expenses 28,756 39,651 Operating loss: Agribusiness (6,263) (647) Other operations 378 282 Gain on sales of water rights — 1,488 (Loss) gain on disposal of assets, net (73) 6 Selling, general and administrative (4,593) (6,475) Operating loss (10,551) (5,346) Other (expense) income: Interest income 8 15 Interest expense, net of patronage dividends (779) (260) Equity in earnings of investments, net 176 102 Other (expense) income, net (863) 11 Total other expense (1,458) (132) Loss before income tax benefit (12,009) (5,478) Income tax benefit 2,696 2,407 Net loss (9,313) (3,071) Net income attributable to noncontrolling interests, net (114) (3) Net loss attributable to Limoneira Company $ (9,427) $ (3,074) Non-GAAP Financial Measures Due to significant depreciable assets associated with the nature of our operations and interest costs associated with our capital structure, management believes that earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, which excludes stock-based compensation, loss (gain) on disposal of assets, net and foreign currency transaction losses, are important measures to evaluate our results of operations between periods on a more comparable basis. Adjusted EBITDA in fiscal year 2025 did not exclude foreign currency transaction losses which has now been excluded as management believes this is a better representation of cash generated by operations. Foreign currency transaction losses were immaterial in fiscal year 2025. Such measurements are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and should not be construed as an alternative to reported results determined in accordance with GAAP. The non-GAAP information provided is unique to us and may not be consistent with methodologies used by other companies. 29 EBITDA and adjusted EBITDA are summarized and reconciled to net loss attributable to Limoneira Company, which management considers to be the most directly comparable financial measure calculated and presented in accordance with GAAP, as follows (in thousands): Three Months Ended January 31, 2026 2025 Net loss attributable to Limoneira Company $ (9,427) $ (3,074) Interest income (8) (15) Interest expense, net of patronage dividends 779 260 Income tax benefit (2,696) (2,407) Depreciation and amortization 2,158 2,016 EBITDA $ (9,194) $ (3,220) Stock-based compensation 344 932 Loss (gain) on disposal of assets, net 73 (6) Foreign currency transaction losses 1,043 — Adjusted EBITDA $ (7,734) $ (2,294) Three Months Ended January 31, 2026 Compared to the Three Months Ended January 31, 2025 Revenues Total net revenues were $18.2 million for the three months ended January 31, 2026, compared to $34.3 million for the same period of fiscal year 2025. The 47% decrease of $16.1 million was primarily due to decreased agribusiness revenues from lemons, oranges and farm management as detailed below ($ in thousands): Three Months Ended January 31, 2026 2025 Change Lemons $ 15,676 $ 28,261 $ (12,585) (45)% Avocados — 162 (162) (100)% Oranges 10 1,568 (1,558) (99)% Specialty citrus and wine grapes 685 503 182 36% Farm management — 1,181 (1,181) (100)% Other 385 1,177 (792) (67)% Agribusiness revenues $ 16,756 $ 32,852 $ (16,096) (49)% • Lemons: The decrease for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to our partnership with Sunkist, which resulted in lower prices and decreased volume of fresh carton sales and a decrease of brokered and other lemon sales. Fresh carton sales were $11.9 million and $21.2 million, in aggregate, on 681,000 and 1,147,000 cartons of lemons sold at average per carton prices of $17.41 and $18.44, for the first quarter of fiscal years 2026 and 2025, respectively. The decrease in fresh carton volume was primarily related to a shift in our volume under the Sunkist Agreement from the first and second quarters and into our third and fourth quarters. Per carton prices for the first quarter of fiscal year 2026 are net of the Sunkist marketing fee. Brokered lemons and other lemon sales were $1.0 million and $2.2 million for the first quarter of fiscal years 2026 and 2025, respectively, due to the transition of our brokerage operations to Sunkist. Lemon revenue included packing and handling revenue of $2.8 million and $4.5 million for the first quarter of fiscal years 2026 and 2025, respectively, and lemon by-product sales of $0.4 million for the first quarter of fiscal year 2025. Lemon by-product sales were immaterial for the first quarter of fiscal year 2026. • Avocados: Due to harvest timing, no avocados were sold in the first quarter of fiscal year 2026. We sold 73,000 pounds of avocados at an average per pound price of $2.25 in the first quarter of fiscal year 2025. • Oranges: The decrease for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was related to the sale of our Chilean agricultural properties and the transition of our citrus brokerage operations to Sunkist. 30 • Specialty citrus and wine grapes: The increase for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to wine grape sales in the first quarter of fiscal year 2026. Due to harvest timing, no wine grape revenue was recorded for the first quarter of fiscal year 2025. The wine grape increase was partially offset by a decrease in specialty citrus due to the transition of our citrus brokerage operations to Sunkist. • Farm management: Farm management revenue for the first quarter of fiscal year 2025 was comprised primarily of farming, management and operations services provided to the Northern Properties prior to the termination of the agreement effective March 31, 2025. No farm management services were provided during the first quarter of fiscal year 2026. • Other: Other revenue, comprised primarily of fallowing and shipping, decreased for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, primarily due to decreased shipping revenue. The Company no longer provides shipping services under the Sunkist Agreement. Other operations revenue for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was similar at $1.5 million. Costs and Expenses Total costs and expenses were $28.8 million for the three months ended January 31, 2026, compared to $39.7 million for the same period of fiscal year 2025. The 27% decrease of $10.9 million was primarily due to a decrease in agribusiness costs and expenses and a decrease in selling, general and administrative expenses, partially offset by gains on sales of water rights in the first quarter of fiscal year 2025. Agribusiness costs and expenses are detailed below ($ in thousands): Three Months Ended January 31, 2026 2025 Change Packing costs $ 9,000 $ 10,591 $ (1,591) (15)% Harvest costs 1,167 1,821 (654) (36)% Growing costs 3,384 4,262 (878) (21)% Third-party grower and supplier costs 7,522 14,352 (6,830) (48)% Other costs 24 699 (675) (97)% Depreciation and amortization 1,922 1,774 148 8% Agribusiness costs and expenses $ 23,019 $ 33,499 $ (10,480) (31)% • Packing costs: Packing costs consist primarily of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies, and facility operating costs. We packed and sold 681,000 and 1,147,000 cartons of lemons at average per carton costs of $13.22 and $9.23, for the first quarter of fiscal years 2026 and 2025, respectively. The increase in per carton packing costs was primarily due to decreased volume and higher costs for labor and repairs and maintenance. We incurred packinghouse repair costs in the first quarter of fiscal year 2026 and received insurance proceeds related to these costs in the second quarter of fiscal year 2026. • Harvest costs: The decrease for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to decreased 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 for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to the termination of the farm management agreement effective March 31, 2025 and farming operational decisions made in response to 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 and suppliers is referred to as third-party grower and supplier costs. The decrease for the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to decreased costs of third-party grower fruit and brokered fruit. We incurred costs for third-party grower fruit of $7.1 million and $11.7 million, for the first quarter of fiscal years 2026 and 2025, respectively. Additionally, we incurred costs for brokered fruit of $0.4 million and $2.7 million, for the first quarter of fiscal years 2026 and 2025, respectively. Of the 681,000 and 1,147,000 cartons of lemons packed and sold, 534,000 (78%) and 953,000 (83%) were procured from third-party growers at average per carton prices of $13.26 and $12.23, for the first quarter of fiscal years 2026 and 2025, respectively. 31 • Other costs: The decrease in the first quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was due to decreased freight costs. • Depreciation and amortization: Depreciation and amortization was $1.9 million in the first quarter of fiscal year 2026, compared to $1.8 million in the same period of fiscal year 2025. Other operations expenses were $1.1 million for the first quarter of fiscal year 2026, compared to $1.2 million for the same period of fiscal year 2025. Gain on sales of water rights was $1.5 million for the first quarter of fiscal year 2025 due to three separate sale transactions of Santa Paula Basin water pumping rights. Selling, general and administrative costs and expenses were $4.6 million for the first quarter of fiscal year 2026, compared to $6.5 million for the same period of fiscal year 2025. The 29% decrease of $1.9 million was primarily due to: • $1.5 million net decrease in salaries, benefits and incentive compensation, primarily related to transition of the Company’s sales and marketing function to Sunkist; and • $0.4 million net decrease in other general and administrative expenses. Other Expense Total other expense was $1.5 million for the first quarter of fiscal year 2026, compared to $0.1 million for the same period of fiscal year 2025. The increase of $1.4 million was primarily due to: • $0.9 million increase in other expense primarily related to foreign exchange transaction losses, net; and • $0.5 million increase in interest expense, net of patronage dividends. Income Taxes We recorded an estimated income tax benefit of $2.7 million and $2.4 million on pre-tax loss of $12.0 million and $5.5 million, for the first quarter of fiscal years 2026 and 2025, respectively. The tax benefit recorded for the first quarter of fiscal year 2026 differs from the U.S. federal statutory tax rate of 21.0% primarily due to foreign jurisdictions that are taxed at different rates, state taxes, tax impact of stock-based compensation, executive compensation, nondeductible tax items and valuation allowances on certain deferred tax assets of foreign subsidiaries. Our projected annual effective blended tax rate for fiscal year 2026, excluding discrete items, is approximately 7.3%. Net Income Attributable to Noncontrolling Interests, Net Net income attributable to noncontrolling interests, net for the first quarter of fiscal year 2026 represents 10% of PDA’s net income, 49% of Trapani Fresh’s net loss and 45.1% of Del Mar’s net loss. Net income attributable to noncontrolling interests, net for the first quarter of fiscal year 2025 represents 10% of PDA’s net income and 49% of Trapani Fresh’s net loss. Segment Results of Operations We operate in four reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness. Our reportable operating segments are strategic business units with different products and services, distribution processes and customer bases. We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. Each segment is subject to review and evaluations related to current market conditions, market opportunities and available resources. During fiscal year 2025, the Company changed its presentation of fresh lemons and lemon packing revenue and costs to remove reference to intersegment revenue and costs and eliminations. Prior year information has been recast to conform to the current year presentation. The Company adopted ASU 2023-07 as of fiscal year 2025 and, as a result, expanded its segment information to include significant segment expenses and other segment items. See Note 17 - Segment Information for additional information regarding our operating segments. 32 Three Months Ended January 31, 2026 Compared to the Three Months Ended January 31, 2025 The following table shows the segment results of operations for the three months ended January 31, 2026 (in thousands): Fresh Lemons Lemon Packing Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 8,718 $ 6,958 $ — $ 1,080 $ 16,756 $ 1,449 $ 18,205 Costs and expenses, excluding depreciation and amortization: Labor and benefits — 3,801 — — 3,801 — 3,801 Packing supplies and fruit treatments — 2,047 — — 2,047 — 2,047 Harvest costs 998 — — 169 1,167 — 1,167 Growing costs 2,548 — 29 807 3,384 — 3,384 Third party grower and supplier costs 7,492 — — 30 7,522 — 7,522 Other segment items — 3,152 — 24 3,176 903 4,079 Loss on disposal of assets, net — — — — — 73 73 Selling, general and administrative — — — — — 4,525 4,525 Total costs and expenses, excluding depreciation and amortization 11,038 9,000 29 1,030 21,097 5,501 26,598 Depreciation and amortization — — — — 1,922 236 2,158 Operating (loss) income $ (2,320) $ (2,042) $ (29) $ 50 $ (6,263) $ (4,288) $ (10,551) The following table shows the segment results of operations for the three months ended January 31, 2025 (in thousands): Fresh Lemons Lemon Packing Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 16,446 $ 11,815 $ 162 $ 4,429 $ 32,852 $ 1,453 $ 34,305 Costs and expenses, excluding depreciation and amortization: Labor and benefits — 4,215 — — 4,215 — 4,215 Packing supplies and fruit treatments — 3,111 — — 3,111 — 3,111 Harvest costs 1,761 — 15 45 1,821 — 1,821 Growing costs 2,926 — 22 1,314 4,262 — 4,262 Third party grower and supplier costs 12,472 — — 1,880 14,352 — 14,352 Other segment items — 3,265 — 699 3,964 1,000 4,964 Gain on sale of water rights — — — — — (1,488) (1,488) Gain on disposal of assets, net — — — — — (6) (6) Selling, general and administrative — — — — — 6,404 6,404 Total costs and expenses, excluding depreciation and amortization 17,159 10,591 37 3,938 31,725 5,910 37,635 Depreciation and amortization — — — — 1,774 242 2,016 Operating (loss) income $ (713) $ 1,224 $ 125 $ 491 $ (647) $ (4,699) $ (5,346) 33 The following analysis should be read in conjunction with the previous section “Results of Operations.” Fresh Lemons Fresh lemons segment revenue is comprised of sales of fresh lemons, lemon by-products, brokered lemons and other lemon revenue. Our fresh lemons segment total net revenues were $8.7 million for the first quarter of fiscal year 2026, compared to $16.4 million for the same period of fiscal year 2025. The 47% decrease of $7.7 million was primarily due to: • Fresh lemon sales net of pack charge decrease of $6.1 million; • Brokered lemons and other lemon sales decrease of $1.2 million; and • Lemon by-products sales decrease of $0.4 million. Costs and expenses associated with our fresh lemons segment include growing costs, harvest costs and cost of lemons we procure from third-party growers and suppliers. Our fresh lemons segment costs and expenses were $11.0 million for the first quarter of fiscal year 2026, compared to $17.2 million for the same period of fiscal year 2025. The 36% decrease of $6.2 million was primarily due to: • Third-party grower and supplier costs decrease of $5.0 million; • Harvest costs decrease of $0.8 million; and • Growing costs decrease of $0.4 million. Lemon Packing Lemon packing segment revenue is comprised of packing revenue and packing and handling revenue. Our lemon packing segment total net revenues were $7.0 million for the first quarter of fiscal year 2026, compared to $11.8 million for the same period of fiscal year 2025. The 41% decrease of $4.8 million was primarily due to a decrease in cartons of lemons packed and sold. 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. Our lemon packing costs and expenses were $9.0 million for the first quarter of fiscal year 2026, compared to $10.6 million for the same period of fiscal year 2025. The 15% decrease of $1.6 million was primarily due to: • Packing supplies and fruit treatments decrease of $1.1 million; • Labor and benefits decrease of $0.4 million; and • Other segment items decrease of $0.1 million. Lemon packing segment operating (loss) income per carton sold was $(3.00) for the first quarter of fiscal year 2026, compared to $1.07 for the same period of fiscal year 2025. Avocados Our avocados segment had no revenue for the first quarter of fiscal year 2026, compared to $0.2 million for the same period of fiscal year 2025. Costs and expenses associated with our avocados segment include growing and harvest costs. Our avocados segment costs and expenses were immaterial for the first quarter of fiscal years 2026 and 2025. Other Agribusiness Our other agribusiness segment total net revenues were $1.1 million for the first quarter of fiscal year 2026, compared to $4.4 million for the same period of fiscal year 2025. The 76% decrease of $3.3 million was primarily due to: • Orange revenue decrease of $1.5 million; • Farm management revenue decrease of $1.2 million; • Other revenue decrease of $0.8 million; and • Specialty citrus revenue increase of $0.2 million. 34 Costs and expenses associated with our other agribusiness segment include growing costs, harvest costs, brokered fruit costs and shipping costs. Our other agribusiness costs and expenses were $1.0 million for the first quarter of fiscal year 2026, compared to $3.9 million for the same period of fiscal year 2025. The 74% decrease of $2.9 million was primarily due to: • Brokered fruit costs decrease of $1.8 million; • Shipping costs decrease of $0.7 million; • Growing costs decrease of $0.5 million; and • Harvest costs increase of $0.1 million. Total agribusiness depreciation and amortization expenses were $1.9 million for the first quarter of fiscal year 2026, compared to $1.8 million for the same period of fiscal year 2025. Corporate and Other Our corporate and other operations revenues were $1.5 million for the first quarter of fiscal years 2026 and 2025. Costs and expenses in our corporate and other operations primarily includes selling, general and administrative costs and expenses, and various gains and losses not allocated to the operating segments. Costs and expenses in our corporate and other operations were $5.5 million for the first quarter of fiscal year 2026, compared to $5.9 million for the same period of fiscal year 2025. Depreciation and amortization expenses in our corporate and other operations were $0.2 million for the first quarter of fiscals year 2026 and 2025. Seasonal Operations Historically, our agribusiness operations have been seasonal in nature, with quarterly revenues fluctuating depending on the timing and variety of crops being harvested. Cultural costs in our agribusiness tend to be higher for the first and second quarters and lower for the third and fourth quarters because of the timing of expensing cultural costs for the current year that were inventoried for the prior year. Our harvest costs generally increase for the second quarter and peak for the third quarter, coinciding with increased production. Lemon revenues are expected to shift from the first and second quarters into the third and fourth quarters in connection with the Sunkist Agreement. 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. 35 Results of Operations for the Trailing Twelve Months Ended January 31, 2026 and 2025 The following table shows the unaudited results of operations (in thousands): Trailing Twelve Months Ended January 31, 2026 2025 Net revenues: Agribusiness $ 137,589 $ 180,436 Other operations 6,034 5,641 Total net revenues 143,623 186,077 Costs and expenses: Agribusiness 144,330 159,192 Other operations 4,377 5,263 Impairment of intangible asset — 643 Gain on sales of water rights — (1,488) Loss (gain) on disposal of assets 785 (348) Gain on remeasurement of previously held equity method investment (2,852) — Selling, general and administrative 22,593 26,594 Total costs and expenses 169,233 189,856 Operating loss (25,610) (3,779) Other (expense) income: Interest income 55 111 Interest expense, net of patronage dividends (2,072) (1,014) Equity in earnings of investments, net 872 18,417 Other (expense) income, net (781) 201 Total other (expense) income (1,926) 17,715 (Loss) income before income tax benefit (provision) (27,536) 13,936 Income tax benefit (provision) 4,938 (6,156) Net (loss) income (22,598) 7,780 Net loss attributable to noncontrolling interest, net 264 447 Net (loss) income attributable to Limoneira Company $ (22,334) $ 8,227 The following analysis should be read in conjunction with the previous section “Results of Operations.” • Total net revenues decreased $42.5 million, primarily due to decreased lemon, avocado and farm management revenue. • Total costs and expenses decreased $20.6 million, primarily due to decreased agribusiness costs and selling, general and administrative expenses and the gain on remeasurement of previously held equity method investment. • Total other income decreased $19.6 million, primarily due to decreased equity in earnings of investments related to LLCB. • Income tax benefit increased $11.1 million due to increased pre-tax loss of $41.5 million and the effects of estimated interim tax provisions. 36 Liquidity and Capital Resources Overview Our primary sources of liquidity are cash and cash flows generated from our operations, use of our revolving credit facility, sales of assets and distributions from our equity investments. Our liquidity and capital position fluctuate during the year depending on seasonal production cycles, weather events and demand for our products. We generally grow crops during our first and fourth fiscal quarters and harvest them during our second and third fiscal quarters. In connection with the Sunkist Agreement, we expect lemon revenues to be higher during our third and fourth fiscal quarters. To meet working capital demand and investment requirements of our agribusiness and real estate development projects and to supplement operating cash flows, we utilize our revolving credit facility to fund agricultural inputs until sufficient returns from crops allow us to repay amounts borrowed. Raw materials needed to propagate the various crops grown by us consist primarily of fertilizer, herbicides, insecticides, fuel and water, all of which are readily available from local sources. Material contractual obligations arising in the normal course of business consist primarily of purchase obligations under the Sunkist Agreement, long-term variable rate debt and related interest payments and operating and finance leases. See Note 10 - Long-Term Debt and Note 11 - Leases for amounts outstanding as of January 31, 2026 related to debt and leases. 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 12 months. We believe our revenue generating operations, distributions from equity investments and credit facilities will generate sufficient cash needed to operate beyond the next 12 months. In addition, we have the ability to control a portion of our investing and financing cash flows to the extent necessary based on our liquidity demands. Cash Flows from Operating Activities Net cash used in operating activities was $11.7 million and $12.9 million for the three months ended January 31, 2026 and 2025, respectively. The significant components of our cash flows used in operating activities were as follows: • Net loss was $9.3 million and $3.1 million for the three months ended January 31, 2026 and 2025, respectively. The components of net loss for the three months ended January 31, 2026, compared to net loss for the same period of fiscal year 2025, consists of an increase in total other expense of $1.3 million, an increase in operating loss of $5.2 million and an increase in income tax benefit of $0.3 million. • Adjustments to reconcile net loss to net cash used in operating activities: ◦ Adjustments were $(0.2) million and $(0.6) million for the three months ended January 31, 2026 and 2025, respectively, primarily related to depreciation and amortization, gain on sales of water rights, stock compensation expense and deferred income taxes. ◦ Changes in operating assets and liabilities used $2.2 million and $9.3 million of operating cash for the three months ended January 31, 2026 and 2025, respectively, primarily related to accounts receivables and receivables/other from related parties, prepaid expenses and other current assets, accounts payable and growers and suppliers payable, and accrued liabilities and payables to related parties. Cash Flows from Investing Activities Net cash used in investing activities was $3.4 million and $3.5 million for the three months ended January 31, 2026 and 2025, respectively. ▪ The $3.4 million of cash used in investing activities for the three months ended January 31, 2026 was comprised primarily of capital expenditures of $3.0 million, mainly related to orchard and vineyard development, and equity investment contributions and capitalized interest of $0.3 million. ▪ The $3.5 million of cash used in investing activities for the three months ended January 31, 2025 was comprised primarily of capital expenditures of $4.1 million, mainly related to orchard and vineyard development, partially offset by proceeds from sales of water rights of $0.6 million. 37 Cash Flows from Financing Activities Net cash provided by financing activities was $15.3 million and $14.5 million for the three months ended January 31, 2026 and 2025, respectively. • The $15.3 million of cash provided by financing activities for the three months ended January 31, 2026 was comprised primarily of net borrowings of long-term debt of $17.5 million, partially offset by common and preferred dividends of $1.5 million and the exchange of common stock of $0.4 million. • The $14.5 million of cash provided by financing activities for the three months ended January 31, 2025 was comprised primarily of net borrowings of long-term debt of $17.4 million, partially offset by common and preferred dividends of $1.5 million and the exchange of common stock of $1.2 million. Transactions Affecting Liquidity and Capital Resources Credit Facilities and Long-Term Debt We finance our working capital and other liquidity requirements primarily through cash from operations, distributions from equity investments and from our Credit Facility with AgWest Farm Credit, (the "Lender"). In June 2025, we entered into a Master Loan Agreement (the “MLA”) together with a revolving credit facility supplement (the “Revolving Credit Supplement”) and a non-revolving credit facility supplement (the “Non-Revolving Credit Supplement” and, together with the Revolving Credit Supplement, the “Supplements”). The MLA governs the terms of the Supplements and extends the principal repayment to July 1, 2030. Additional information regarding these loans can be found in Note 10 - Long-Term Debt. The Supplements provide aggregate borrowing capacity of $115.0 million, comprised of $114.0 million under the Revolving Credit Supplement and $1.0 million under the Non-Revolving Credit Supplement which can be used solely to support calls on Letters of Credit. There are no amounts outstanding on the Non-Revolving Credit Supplement. As of January 31, 2026, our outstanding borrowings under the Revolving Credit Supplement were $89.9 million and we had $24.1 million available to borrow. The MLA subjects us to affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, requirements to maintain and repair any collateral, restrictions on the sale of assets, restrictions on the use of proceeds, prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets of our business. We were subject to an annual financial covenant that required us to maintain compliance with a specific debt service coverage ratio of 1.0:1.0 for the fiscal year ending October 31, 2026, and 1.25:1.0 for any fiscal year ending thereafter. 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 for the period January 31, 2026 through July 31, 2027, which requires us to maintain a specific debt to capitalization ratio. We were in compliance with this covenant as of January 31, 2026. Dividends The holders of our Series B Convertible Preferred Stock and Series B-2 Preferred Stock are entitled to receive cumulative cash dividends. Such preferred dividends paid were $0.1 million for the three months ended January 31, 2026 and 2025. Cash dividends declared for the three months ended January 31, 2026 and 2025 were $0.075 per common share and such dividends paid were $1.4 million for the three months ended January 31, 2026 and 2025. 38 Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to develop critical accounting policies and make certain estimates, assumptions and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates and judgments on historical experience, available relevant data and other information that we believe to be reasonable under the circumstances, and we continue to review and evaluate these estimates. Actual results may materially differ from these estimates under different assumptions or conditions as new or additional information becomes available in future periods. As of January 31, 2026, our critical accounting policies and estimates have not changed since the filing of our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, as filed with the SEC on December 23, 2025. Please refer to that filing for a description of our critical accounting policies and estimates. Recent Accounting Pronouncements See Note 2 - Summary of Significant Accounting Policies of the notes to consolidated financial statements included in this Quarterly Report for information concerning recent accounting pronouncements. Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes in the disclosures discussed in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended October 31, 2025, as filed with the SEC on December 23, 2025.