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 and Jujuy, Argentina, which collectively consist of approximately 1,700 acres of lemons, 1,700 acres of avocados and 400 acres of wine grapes. We also operate our own packinghouse in Santa Paula, California, 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, PDA and San Pablo 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 130 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 (the “Sunkist Agreement”) with Sunkist Growers, Inc., a nonprofit marketing cooperative (“Sunkist”), 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. Growing costs, also referred to as cultural costs, in our agribusiness division tend to be lower in the first and second quarters and higher 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. In connection with the Sunkist Agreement, lemon revenues are expected to peak in the third and fourth quarters. 30 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. Southern California is experiencing above average precipitation for the 2025 to 2026 rainfall season. As of July 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 2026, the U.S. Bureau of Reclamation announced that Lake Mead will continue to operate in a Tier 1 shortage in 2027, 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. In April 2026, we made a decision to remove all of our remaining lemon orchards in Yuma, Arizona. This decision aligns with our strategic plan to monetize Class 3 Colorado River water rights by conserving water via crop substitution to low water use crops. We continue to assess the impact these ongoing water reductions may have on our Arizona land. 31 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 made an initial payment to the Sellers in the aggregate amount of $6.8 million, of which approximately $0.7 million is 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 March 23, 2026, the Board of Directors (the “Board”) paused regular cash dividends on our outstanding common stock, as well as dividends on our Series B Stock and Series B-2 Preferred Stock, to support strategic capital investments, including transitioning a portion of our agricultural lands to higher-value avocado production and developing new housing. The Board will monitor the incremental increases in cash flow to the Company attributable to these strategic capital investments and expects to resume dividends aligned with historical practice as soon as the Board deems it prudent to do so. On April 14, 2026, the Company and California Wood Recycling, Inc., a California corporation dba Agromin (“Agromin”), entered into the Operating Agreement of Agromin-Limoneira LLC (“Agro-Limo”), which was formed for the purpose of facilitating a 50/50 joint venture between the Company and Agromin to design, construct and operate an organics recycling facility on land owned by the Company in Ventura County. Such facility is expected to be operational by the second half of fiscal year 2027 and the Company will lease the site to Agro-Limo and provide certain interim financing. In April 2026, we made the decision to cease citrus farming operations on the remaining 600 lemon acres located at our Associated Citrus Packers property in Yuma, Arizona. This decision aligns with our strategic plan to monetize Class 3 Colorado River water rights by conserving water via crop substitution to low-water-use crops. As a result, we recorded a loss on disposal of assets of $7.2 million in the second quarter of fiscal year 2026. On April 14, 2026, our subsidiary, Windfall Investors, LLC, entered into a Purchase and Sale Agreement to sell an 80% undivided tenant-in-common interest in our Windfall Farms property located in Paso Robles, California, consisting of approximately 724 acres of land, including approximately 400 acres of wine grapes and related improvements and infrastructure. The aggregate purchase price was $16.0 million, consisting of $10.0 million in cash and a $6.0 million promissory note secured by a deed of trust. As a result of the pending transactions contemplated by such Purchase and Sale Agreement, in the second quarter of fiscal year 2026 we recorded an impairment of $9.3 million on the property, plant and equipment and an expected loss on disposal of $0.9 million related to expected transaction costs. On June 15, 2026, we received written notice of termination from the potential buyer and the proposed transaction was terminated. On August 15, 2026, our subsidiary, Windfall Investors, LLC, entered into a Purchase and Sale Agreement with a different potential buyer to sell the Windfall Farms property for a purchase price of $15.0 million following a public auction. The transaction is expected to close on September 14, 2026, subject to customary closing conditions. As a result of the pending transaction contemplated by the second Purchase and Sale Agreement, the Company recognized an additional impairment charge of $4.1 million in the third quarter of fiscal year 2026, for an aggregate impairment of $13.5 million for the nine months ended July 31, 2026. 32 Results of Operations The following table shows the results of operations (in thousands): Three Months Ended July 31, Nine Months Ended July 31, 2026 2025 2026 2025 Net revenues: Agribusiness $ 42,165 $ 45,942 $ 81,451 $ 112,376 Other operations 1,644 1,536 4,489 4,526 Total net revenues 43,809 47,478 85,940 116,902 Costs and expenses: Agribusiness 37,252 42,050 83,429 107,253 Other operations 1,038 1,086 3,120 3,266 Impairment of assets 4,129 — 13,453 — Gain on sales of water rights — — — (1,488) Loss and expected loss on disposal of assets, net 335 15 8,229 27 Other operating income — — (1,114) — Selling, general and administrative 4,015 4,957 14,028 17,165 Total costs and expenses 46,769 48,108 121,145 126,223 Operating loss: Agribusiness 4,913 3,892 (1,978) 5,123 Other operations 606 450 1,369 1,260 Impairment of assets (4,129) — (13,453) — Gain on sales of water rights — — — 1,488 Loss and expected loss on disposal of assets, net (335) (15) (8,229) (27) Other operating income — — 1,114 — Selling, general and administrative (4,015) (4,957) (14,028) (17,165) Operating loss (2,960) (630) (35,205) (9,321) Other (expense) income: Interest income 28 22 152 50 Interest expense, net of patronage dividends (1,114) (410) (2,453) (898) Equity in earnings (losses) of investments, net 62 274 (149) 867 Other income (expense), net 8 10 (5,935) 26 Total other (expense) income (1,016) (104) (8,385) 45 Loss before income tax benefit (provision) (3,976) (734) (43,590) (9,276) Income tax benefit (provision) 1,025 (182) 9,002 1,924 Net loss (2,951) (916) (34,588) (7,352) Net (income) loss attributable to noncontrolling interests, net (42) 61 748 62 Net loss attributable to Limoneira Company $ (2,993) $ (855) $ (33,840) $ (7,290) 33 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, impairment of assets, loss and expected loss on disposal of assets, net, and foreign currency gains or losses, are important measures to evaluate our results of operations between periods on a more comparable basis. Beginning in fiscal year 2026, adjusted EBITDA excludes foreign currency gains or losses, as management believes this is a better representation of cash generated by operations. Foreign currency losses were immaterial in fiscal year 2025 and, therefore, were not separately adjusted. 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. 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 July 31, Nine Months Ended July 31, 2026 2025 2026 2025 Net loss attributable to Limoneira Company $ (2,993) $ (855) $ (33,840) $ (7,290) Interest income (28) (22) (152) (50) Interest expense, net of patronage dividends 1,114 410 2,453 898 Income tax (benefit) provision (1,025) 182 (9,002) (1,924) Depreciation and amortization 1,948 2,482 6,120 6,607 EBITDA $ (984) $ 2,197 $ (34,421) $ (1,759) Stock-based compensation 388 762 1,034 2,245 Impairment of assets 4,129 — 13,453 — Loss and expected loss on disposal of assets, net 335 15 8,229 27 Foreign currency (gains) losses (5) — 6,115 — Adjusted EBITDA $ 3,863 $ 2,974 $ (5,590) $ 513 Three Months Ended July 31, 2026 Compared to the Three Months Ended July 31, 2025 Revenues Total net revenues were $43.8 million for the three months ended July 31, 2026, compared to $47.5 million for the same period of fiscal year 2025. The 8% decrease of $3.7 million was primarily due to decreased agribusiness revenues from oranges and specialty citrus and wine grapes as detailed below ($ in thousands): Three Months Ended July 31, 2026 2025 Change Lemons $ 33,755 $ 34,186 $ (431) (1)% Avocados 8,029 8,488 (459) (5)% Oranges — 1,696 (1,696) (100)% Specialty citrus and wine grapes — 618 (618) (100)% Farm management — 102 (102) (100)% Other 381 852 (471) (55)% Agribusiness revenues $ 42,165 $ 45,942 $ (3,777) (8)% 34 • Lemons: The decrease for the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to our transition to Sunkist, which resulted in decreased brokered lemons and other lemon sales, partially offset by increased fresh lemon carton sales driven primarily by higher prices. Fresh lemon carton sales were $27.3 million and $23.8 million on 1,373,000 and 1,397,000 cartons of lemons sold at average per carton prices of $19.88 and $17.02, for the third quarter of fiscal years 2026 and 2025, respectively. Fresh lemon carton sales and per carton prices for the third quarter of fiscal year 2026 are net of the Sunkist marketing fee. Brokered lemons and other lemon sales were immaterial and $3.8 million for the third quarter of fiscal years 2026 and 2025, respectively. Lemon revenue included pack handling revenue of $6.0 million and $6.1 million for the third quarter of fiscal years 2026 and 2025, respectively, and lemon by-product sales of $0.5 million for the third quarters of fiscal years 2026 and 2025. • Avocados: The decrease for the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to lower prices, partially offset by increased volume of avocados sold. The California avocado crop typically experiences alternating years of high and low production due to plant physiology. We sold 7,013,000 and 5,654,000 pounds of avocados at average per pound prices of $1.15 and $1.50, for the third quarter of fiscal years 2026 and 2025, respectively. • Oranges: The decrease for the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily related to the transition of our citrus brokerage operations to Sunkist. • Specialty citrus and wine grapes: The decrease for the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to decreased specialty citrus sales related to the transition of our citrus brokerage operations to Sunkist. • Other: Other revenue, comprised primarily of fallowing and shipping, decreased for the third 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 was $1.6 million for the third quarter of fiscal year 2026, compared to $1.5 million for the same period of fiscal year 2025. Costs and Expenses Total costs and expenses were $46.8 million for the three months ended July 31, 2026, compared to $48.1 million for the same period of fiscal year 2025. The 3% decrease of $1.3 million was primarily due to decreases in agribusiness costs and expenses and selling, general and administrative expenses, partially offset by impairment of the Windfall Farms property assets and loss on disposal of assets in the third quarter of fiscal year 2026. Agribusiness costs and expenses are detailed below ($ in thousands): Three Months Ended July 31, 2026 2025 Change Packing costs $ 13,434 $ 12,724 $ 710 6% Harvest costs 3,516 3,910 (394) (10)% Growing costs 5,664 4,056 1,608 40% Third-party grower and supplier costs 12,926 18,670 (5,744) (31)% Other costs — 448 (448) (100)% Depreciation and amortization 1,712 2,242 (530) (24)% Agribusiness costs and expenses $ 37,252 $ 42,050 $ (4,798) (11)% • 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, shipping, cold storage and facility operating costs. We packed and sold 1,373,000 and 1,397,000 cartons of lemons at average per carton costs of $9.79 and $9.11, for the third quarter of fiscal years 2026 and 2025, respectively. The increase in per carton packing costs was primarily due to increased costs related to shipping and cold storage of lemons. • Harvest costs: The decrease for the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to decreased volume of lemons harvested, partially offset by higher avocado volume. 35 • Growing costs: Growing costs consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation. The increase for the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to 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 third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to decreased costs for brokered fruit of $7.3 million, partially offset by increased costs for third-party grower fruit of $1.6 million. The increase in third-party grower fruit was primarily due to higher prices of third-party grower fruit sold. We incurred costs for third-party grower fruit of $13.1 million and $11.5 million, for the third quarter of fiscal years 2026 and 2025, respectively. Of the 1,373,000 and 1,397,000 cartons of lemons packed and sold, 1,002,000 (73%) and 1,012,000 (72%) were procured from third-party growers at average per carton prices of $13.03 and $11.35, for the third quarter of fiscal years 2026 and 2025, respectively. • Other costs: The decrease in the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was due to decreased freight costs. • Depreciation and amortization: The decrease in the third quarter of fiscal year 2026, compared to the same period of fiscal year 2025, was due to asset disposals. Other operations expenses were $1.0 million in the third quarter of fiscal year 2026, compared to $1.1 million in the same period of fiscal year 2025. Impairment of assets was $4.1 million for the third quarter of fiscal year 2026, due to impairment of the Windfall Farms property assets. Loss and expected loss on disposal of assets, net was $0.3 million for the third quarter of fiscal year 2026, compared to an immaterial loss for the same period of fiscal year 2025. The increase was due to the disposal of miscellaneous agricultural equipment. Selling, general and administrative costs and expenses were $4.0 million for the third quarter of fiscal year 2026, compared to $5.0 million for the same period of fiscal year 2025. The 20% decrease of $1.0 million was primarily due to: • $0.6 million net decrease in salaries, benefits, incentive compensation and other selling expenses, primarily related to transition of the Company’s sales and marketing function to Sunkist; • $0.6 million net decrease in other general and administrative expenses; and • $0.2 million increase in allowance for foreign related-party receivables. Other Expense Total other expense was $1.0 million for the third quarter of fiscal year 2026, compared to $0.1 million for the same period of fiscal year 2025. The increase in other expense of $0.9 million was primarily due to: • $0.7 million increase in interest expense, net of patronage dividends; and • $0.2 million decrease in equity in earnings of investments, net. Income Taxes We recorded an estimated income tax benefit of $1.0 million and a provision of $0.2 million on pre-tax loss of $4.0 million and $0.7 million, for the third quarter of fiscal years 2026 and 2025, respectively. The tax benefit recorded for the third 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. As of July 31, 2026, our projected annual effective blended tax rate for fiscal year 2026, excluding discrete items, is approximately 21.5%. Net (Income) Loss Attributable to Noncontrolling Interests, Net Net (income) loss attributable to noncontrolling interests, net for the third quarter of fiscal year 2026 represents 10% of PDA’s net loss, 49% of Trapani Fresh’s net income and 45.1% of Del Mar’s net income. Net loss attributable to noncontrolling interests, net for the third quarter of fiscal year 2025 represents 10% of PDA’s net loss and 49% of Trapani Fresh’s net loss. 36 Nine Months Ended July 31, 2026 Compared to the Nine Months Ended July 31, 2025 Revenues Total net revenues were $85.9 million for the nine months ended July 31, 2026, compared to $116.9 million for the same period of fiscal year 2025. The 26% decrease of $31.0 million was primarily due to decreased agribusiness revenues from lemons, avocados, oranges, farm management and other as detailed below ($ in thousands): Nine Months Ended July 31, 2026 2025 Change Lemons $ 71,282 $ 89,751 $ (18,469) (21)% Avocados 8,302 11,430 (3,128) (27)% Oranges 20 4,838 (4,818) (100)% Specialty citrus and wine grapes 687 1,792 (1,105) (62)% Farm management — 1,622 (1,622) (100)% Other 1,160 2,943 (1,783) (61)% Agribusiness revenues $ 81,451 $ 112,376 $ (30,925) (28)% • Lemons: The decrease for the first nine months of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to our transition to Sunkist, which resulted in decreased volume of fresh lemon carton sales and brokered lemons and other lemon sales, partially offset by higher prices of fresh lemon carton sales. Fresh lemon carton sales were $56.3 million and $64.6 million on 3,082,000 and 3,901,000 cartons of lemons sold at average per carton prices of $18.25 and $16.57, for the first nine months of fiscal years 2026 and 2025, respectively. Fresh lemon carton sales and per carton prices for the first nine months of fiscal year 2026 are net of the Sunkist marketing fee. Brokered lemons and other lemon sales were $1.0 million and $8.5 million for the first nine months of fiscal years 2026 and 2025, respectively, primarily due to the sale of our Chilean farms and the transition of our brokerage operations to Sunkist. Lemon revenue included pack handling revenue of $13.2 million and $15.3 million and lemon by-product sales of $0.8 million and $1.4 million for the first nine months of fiscal years 2026 and 2025, respectively. • Avocados: The decrease for the first nine months of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to lower prices, partially offset by increased volume of avocados sold. The California avocado crop typically experiences alternating years of high and low production due to plant physiology. We sold 7,298,000 and 6,959,000 pounds of avocados at average per pound prices of $1.14 and $1.64, for the first nine months of fiscal years 2026 and 2025, respectively. • Oranges: The decrease for the first nine months of fiscal year 2026, compared to the same period of fiscal year 2025, was related to the sale of our Chilean farms and the transition of our citrus brokerage operations to Sunkist. • Specialty citrus and wine grapes: The decrease for the first nine months of fiscal year 2026, compared to the same period of fiscal year 2025, was primarily due to decreased specialty citrus sales related to the transition of our citrus brokerage operations to Sunkist, partially offset by increased wine grape sales. • Farm management: Farm management revenue for the first nine months 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 nine months of fiscal year 2026. • Other: Other revenue, comprised primarily of fallowing and shipping, decreased for the first nine months 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 nine months of fiscal year 2026 was similar compared to the same period of fiscal year 2025 at $4.5 million. 37 Costs and Expenses Total costs and expenses were $121.1 million for the first nine months of fiscal year 2026, compared to $126.2 million for the same period of fiscal year 2025. The 4% decrease of $5.1 million was primarily due to a decrease in agribusiness costs and expenses and a decrease in selling, general and administrative expenses plus other operating income, partially offset by impairment of the Windfall Farms property assets and loss on disposal of the lemon orchards in Yuma, Arizona in the first nine months of fiscal year 2026, and by gains on sales of water rights in the first quarter of fiscal year 2025. Agribusiness costs and expenses are detailed below ($ in thousands): Nine Months Ended July 31, 2026 2025 Change Packing costs $ 32,181 $ 35,441 $ (3,260) (9)% Harvest costs 5,693 7,088 (1,395) (20)% Growing costs 10,220 11,684 (1,464) (13)% Third-party grower and supplier costs 29,900 45,460 (15,560) (34)% Other costs 24 1,698 (1,674) (99)% Depreciation and amortization 5,411 5,882 (471) (8)% Agribusiness costs and expenses $ 83,429 $ 107,253 $ (23,824) (22)% • 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, shipping, cold storage and facility operating costs. We packed and sold 3,082,000 and 3,901,000 cartons of lemons at average per carton costs of $10.44 and $9.09, for the first nine months of fiscal years 2026 and 2025, respectively. The increase in per carton packing costs was primarily due to decreased volume and increased costs related to shipping and cold storage of lemons. • Harvest costs: The decrease for the first nine months 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 consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation. The decrease for the first nine months 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 in third-party grower fruit was primarily due to decreased volume of third-party grower fruit packed and sold, partially offset by higher prices of third-party grower fruit sold. Brokered fruit costs were $0.5 million and $12.2 million, respectively, and costs for third-party grower fruit were $29.5 million and $33.3 million for the first nine months of fiscal years 2026 and 2025, respectively. The decrease in third-party grower fruit was primarily due to decreased volume of third-party grower fruit packed and sold, partially offset by higher prices of third-party grower fruit sold. Of the 3,082,000 and 3,901,000 cartons of lemons packed and sold, 2,548,000 (83%) and 3,215,000 (82%) were procured from third-party growers at average per carton prices of $11.56 and $10.36, for the first nine months of fiscal years 2026 and 2025, respectively. • Other costs: The decrease for the first nine months 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 $5.4 million for the first nine months of fiscal year 2026, compared to $5.9 million in the same period of fiscal year 2025. Other operations expenses were $3.1 million for the first nine months of fiscal year 2026, compared to $3.3 million for the same period of fiscal year 2025. Impairment of assets was $13.5 million for the first nine months of fiscal year 2026, due to impairment of the Windfall Farms property assets. There were no sales of water rights for the first nine months of fiscal year 2026. Gain on sales of water rights was $1.5 million for the first nine months of fiscal year 2025, due to three separate sale transactions of Santa Paula Basin water pumping rights. 38 Loss and expected loss on disposal of assets, net was $8.2 million for the first nine months of fiscal year 2026, compared to an immaterial loss for the same period of fiscal year 2025. The increase was primarily due to our decision to remove all of our remaining lemon orchards in Yuma, Arizona. This decision aligns with the Company’s strategic plan to monetize Class 3 Colorado River water rights by conserving water via crop substitution to low water use crops. Other operating income was $1.1 million for the first nine months of fiscal year 2026, related to proceeds from the settlement of insurance claims. Selling, general and administrative costs and expenses were $14.0 million for the first nine months of fiscal year 2026, compared to $17.2 million for the same period of fiscal year 2025. The 18% decrease of $3.2 million was primarily due to: • $3.5 million net decrease in salaries, benefits, incentive compensation and other selling expenses, primarily related to transition of the Company’s sales and marketing function to Sunkist; • $1.6 million net decrease in other general and administrative expenses; and • $1.9 million increase in allowance for foreign related-party receivables. Other (Expense) Income Total other expense was $8.4 million for the first nine months of fiscal year 2026, compared to immaterial total other income for the same period of fiscal year 2025. The increase in other expense of $8.4 million was primarily due to: • $6.0 million increase of other expense, primarily due to foreign exchange losses; • $1.5 million increase of interest expense, net of patronage dividends; and • $1.0 million decrease of equity in earnings of investments, net, primarily due to LLCB’s losses in the first nine months of fiscal year 2026. Income Taxes We recorded an estimated income tax benefit of $9.0 million and $1.9 million on pre-tax loss of $43.6 million and $9.3 million, for the first nine months of fiscal years 2026 and 2025, respectively. The tax benefit recorded for the first nine months 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. As of July 31, 2026, our projected annual effective blended tax rate for fiscal year 2026, excluding discrete items, is approximately 21.5%. Net Loss Attributable to Noncontrolling Interests, Net Net loss attributable to noncontrolling interests, net for the first nine months 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 loss attributable to noncontrolling interests, net for the first nine months 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. 39 Three Months Ended July 31, 2026 Compared to the Three Months Ended July 31, 2025 The following table shows the segment results of operations for the three months ended July 31, 2026 (in thousands): Fresh Lemons Lemon Packing Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 17,864 $ 15,891 $ 8,029 $ 381 $ 42,165 $ 1,644 $ 43,809 Costs and expenses, excluding depreciation and amortization: Labor and benefits — 5,248 — — 5,248 — 5,248 Packing supplies and fruit treatments — 3,758 — — 3,758 — 3,758 Harvest costs 2,210 — 1,306 — 3,516 — 3,516 Growing costs 1,360 — 4,065 239 5,664 — 5,664 Third party grower and supplier costs 12,926 — — — 12,926 — 12,926 Other segment items — 4,428 — — 4,428 871 5,299 Impairment of assets — — — — — 4,129 4,129 Loss and expected loss on disposal of assets, net — — — — — 335 335 Selling, general and administrative — — — — — 3,946 3,946 Total costs and expenses, excluding depreciation and amortization 16,496 13,434 5,371 239 35,540 9,281 44,821 Depreciation and amortization — — — — 1,712 236 1,948 Operating (loss) income $ 1,368 $ 2,457 $ 2,658 $ 142 $ 4,913 $ (7,873) $ (2,960) The following table shows the segment results of operations for the three months ended July 31, 2025 (in thousands): Fresh Lemons Lemon Packing Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 19,630 $ 14,556 $ 8,488 $ 3,268 $ 45,942 $ 1,536 $ 47,478 Costs and expenses, excluding depreciation and amortization: Labor and benefits — 6,008 — — 6,008 — 6,008 Packing supplies and fruit treatments — 3,801 — — 3,801 — 3,801 Harvest costs 2,815 — 1,073 21 3,909 — 3,909 Growing costs 1,480 — 2,660 (84) 4,056 — 4,056 Third party grower and supplier costs 16,510 — — 2,160 18,670 — 18,670 Other segment items — 2,915 — 449 3,364 913 4,277 Loss on disposal of assets, net — — — — — 15 15 Selling, general and administrative — — — — — 4,890 4,890 Total costs and expenses, excluding depreciation and amortization 20,805 12,724 3,733 2,546 39,808 5,818 45,626 Depreciation and amortization — — — — 2,242 240 2,482 Operating (loss) income $ (1,175) $ 1,832 $ 4,755 $ 722 $ 3,892 $ (4,522) $ (630) 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 $17.9 million for the third quarter of fiscal year 2026, compared to $19.6 million for the same period of fiscal year 2025. The 9% decrease of $1.7 million was primarily due to: • Brokered lemons and other lemon sales decrease of $3.8 million; • Lemon by-products sales net of pack charge decrease of $0.2 million; and • Fresh carton sales net of pack charge increase of $2.3 million. 40 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 $16.5 million for the third quarter of fiscal year 2026, compared to $20.8 million for the same period of fiscal year 2025. The 21% decrease of $4.3 million was primarily due to: • Third-party grower and supplier costs decrease of $3.6 million; • Harvest costs decrease of $0.6 million; and • Growing costs decrease of $0.1 million. Lemon Packing Lemon packing segment revenue is comprised primarily of pack charge revenue and pack handling revenue. Our lemon packing segment total net revenues were $15.9 million for the third quarter of fiscal year 2026, compared to $14.6 million for the same period of fiscal year 2025. The 9% increase of $1.3 million was primarily due to an increase in pack handling revenue. Costs and expenses associated with our lemon packing segment primarily consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies, shipping, cold storage and facility operating costs. Our lemon packing costs and expenses were $13.4 million for the third quarter of fiscal year 2026, compared to $12.7 million for the same period of fiscal year 2025. The 6% increase of $0.7 million was primarily due to: • Other segment items increase of $1.5 million, primarily due to shipping and cold storage; and • Labor and benefits decrease of $0.8 million. Lemon packing segment operating income per carton sold was $1.79 for the third quarter of fiscal year 2026, compared to $1.31 for the same period of fiscal year 2025. Avocados Our avocados segment had revenues of $8.0 million for the third quarter of fiscal year 2026, compared to $8.5 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 $5.4 million for the third quarter of fiscal year 2026, compared to $3.7 million for the same period of fiscal year 2025. The 44% increase of $1.7 million was primarily due to: • Growing costs increase of $1.4 million; and • Harvest costs increase of $0.3 million. Other Agribusiness Our other agribusiness segment total net revenues were $0.4 million for the third quarter of fiscal year 2026, compared to $3.3 million for the same period of fiscal year 2025. The 88% decrease of $2.9 million was primarily due to: • Orange revenue decrease of $1.7 million; • Specialty citrus revenue decrease of $0.6 million; • Other revenue decrease of $0.5 million; and • Farm management revenue decrease of $0.1 million. 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 $0.2 million for the third quarter of fiscal year 2026, compared to $2.5 million for the same period of fiscal year 2025. The decrease of $2.3 million was primarily due to: • Brokered fruit costs decrease of $2.2 million; • Shipping costs decrease of $0.4 million; and • Growing costs increase of $0.3 million. Total agribusiness depreciation and amortization expenses were $1.7 million for the third quarter of fiscal year 2026, compared to $2.2 million for the same period of fiscal year 2025. 41 Corporate and Other Our corporate and other operations revenues were $1.6 million for the third quarter of fiscal year 2026, compared to $1.5 million for the same period of fiscal year 2025. Costs and expenses in our corporate and other operations primarily include 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 $9.3 million for the third quarter of fiscal year 2026, compared to $5.8 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 third quarter of fiscal years 2026 and 2025. Nine Months Ended July 31, 2026 Compared to the Nine Months Ended July 31, 2025 The following table shows the segment results of operations for the nine months ended July 31, 2026 (in thousands): Fresh Lemons Lemon Packing Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 37,094 $ 34,188 $ 8,302 $ 1,867 $ 81,451 $ 4,489 $ 85,940 Costs and expenses, excluding depreciation and amortization: Labor and benefits — 13,354 — — 13,354 — 13,354 Packing supplies and fruit treatments — 8,257 — — 8,257 — 8,257 Harvest costs 4,219 — 1,359 115 5,693 — 5,693 Growing costs 4,856 — 4,251 1,113 10,220 — 10,220 Third party grower and supplier costs 29,868 — — 32 29,900 — 29,900 Other segment items — 10,570 — 24 10,594 2,615 13,209 Impairment of assets — — — — — 13,453 13,453 Loss and expected loss on disposal of assets, net — — — — — 8,229 8,229 Other operating income — — — — — (1,114) (1,114) Selling, general and administrative — — — — — 13,824 13,824 Total costs and expenses, excluding depreciation and amortization 38,943 32,181 5,610 1,284 78,018 37,007 115,025 Depreciation and amortization — — — — 5,411 709 6,120 Operating (loss) income $ (1,849) $ 2,007 $ 2,692 $ 583 $ (1,978) $ (33,227) $ (35,205) The following table shows the segment results of operations for the nine months ended July 31, 2025 (in thousands): Fresh Lemons Lemon Packing Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 49,532 $ 40,219 $ 11,430 $ 11,195 $ 112,376 $ 4,526 $ 116,902 Costs and expenses, excluding depreciation and amortization: Labor and benefits — 14,767 — — 14,767 — 14,767 Packing supplies and fruit treatments — 9,742 — — 9,742 — 9,742 Harvest costs 5,686 — 1,325 76 7,087 — 7,087 Growing costs 5,929 — 4,068 1,687 11,684 — 11,684 Third party grower and supplier costs 39,432 — — 6,028 45,460 — 45,460 Other segment items — 10,932 — 1,699 12,631 2,748 15,379 Gain on sales of water rights — — — — — (1,488) (1,488) Loss on disposal of assets, net — — — — — 27 27 Selling, general and administrative — — — — — 16,958 16,958 Total costs and expenses, excluding depreciation and amortization: 51,047 35,441 5,393 9,490 101,371 18,245 119,616 Depreciation and amortization — — — — 5,882 725 6,607 Operating (loss) income $ (1,515) $ 4,778 $ 6,037 $ 1,705 $ 5,123 $ (14,444) $ (9,321) 42 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 $37.1 million for the first nine months of fiscal year 2026, compared to $49.5 million for the same period of fiscal year 2025. The 25% decrease of $12.4 million was primarily due to: • Brokered lemons and other lemon sales decrease of $7.5 million; • Fresh carton sales net of pack charge decrease of $4.0 million; and • Lemon by-products sales net of pack charge decrease of $0.9 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 $38.9 million for the first nine months of fiscal year 2026, compared to $51.0 million for the same period of fiscal year 2025. The 24% decrease of $12.1 million was primarily due to: • Third-party grower and supplier costs decrease of $9.5 million; • Harvest costs decrease of $1.5 million; and • Growing costs decrease of $1.1 million. Lemon Packing Lemon packing segment revenue is comprised primarily of pack charge revenue and pack handling revenue. Our lemon packing segment total net revenues were $34.2 million for the first nine months of fiscal year 2026, compared to $40.2 million for the same period of fiscal year 2025. The 15% decrease of $6.0 million was primarily due to a decrease in cartons of lemons packed and sold. Costs and expenses associated with our lemon packing segment primarily consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies, shipping, cold storage and facility operating costs. Our lemon packing costs and expenses were $32.2 million for the first nine months of fiscal year 2026, compared to $35.4 million for the same period of fiscal year 2025. The 9% decrease of $3.2 million was primarily due to: • Packing supplies and fruit treatments decrease of $1.5 million; • Labor and benefits decrease of $1.4 million; and • Other segment items decrease of $0.3 million. Lemon packing segment operating income per carton sold was $0.65 for the first nine months of fiscal year 2026, compared to $1.23 per carton sold for the same period of fiscal year 2025. Avocados Our avocados segment revenue was $8.3 million for the first nine months of fiscal year 2026, compared to $11.4 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 $5.6 million for the first nine months of fiscal year 2026, compared to $5.4 million for the same period of fiscal year 2025. The 4% increase of $0.2 million was primarily due to an increase in growing costs of $0.2 million. Other Agribusiness Our other agribusiness segment total net revenues were $1.9 million for the first nine months of fiscal year 2026, compared to $11.2 million for the same period of fiscal year 2025. The 83% decrease of $9.3 million was primarily due to: • Orange revenue decrease of $4.8 million; • Other revenue decrease of $1.8 million; • Farm management revenue decrease of $1.6 million; and • Specialty citrus and wine grape revenues decrease of $1.1 million. 43 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 $1.3 million for the first nine months of fiscal year 2026, compared to $9.5 million for the same period of fiscal year 2025. The 86% decrease of $8.2 million was primarily due to: • Brokered fruit costs decrease of $6.0 million; • Shipping costs decrease of $1.6 million; and • Growing costs decrease of $0.6 million. Total agribusiness depreciation and amortization expenses were $5.4 million for the first nine months of fiscal year 2026, compared to $5.9 million for the same period of fiscal year 2025. Corporate and Other Our corporate and other operations revenues for the first nine months of fiscal year 2026 were similar for the same period of fiscal year 2025 at $4.5 million. Costs and expenses in our corporate and other operations primarily include 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 $37.0 million for the first nine months of fiscal year 2026, compared to $18.2 million for the same period of fiscal year 2025. Depreciation and amortization expenses in our corporate and other operations were $0.7 million for the first nine months of fiscal years 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 in the prior year. Our harvest costs generally increase for the second quarter and peak for the third quarter. In connection with the Sunkist Agreement, lemon revenues are expected to peak in the third and fourth quarters. 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. 44 Results of Operations for the Trailing Twelve Months Ended July 31, 2026 and 2025 The following table shows the unaudited results of operations (in thousands): Trailing Twelve Months Ended July 31, 2026 2025 Net revenues: Agribusiness $ 122,760 $ 154,854 Other operations 6,001 5,909 Total net revenues 128,761 160,763 Costs and expenses: Agribusiness 130,986 147,073 Other operations 4,331 4,679 Impairment of assets 13,453 — Gain on sales of water rights — (1,488) Loss and expected loss (gain) on disposal of assets, net 8,908 (351) Gain on remeasurement of previously held equity method investment (2,852) — Other operating income (1,114) — Selling, general and administrative 21,338 22,922 Total costs and expenses 175,050 172,835 Operating loss (46,289) (12,072) Other (expense) income: Interest income 164 105 Interest expense, net of patronage dividends (3,108) (1,028) Equity in (losses) earnings of investments, net (218) 2,107 Other (expense) income, net (5,868) 14 Total other (expense) income (9,030) 1,198 Loss before income tax benefit (55,319) (10,874) Income tax benefit 11,727 1,602 Net loss (43,592) (9,272) Net loss attributable to noncontrolling interest, net 1,060 123 Net loss attributable to Limoneira Company $ (42,532) $ (9,149) The following analysis should be read in conjunction with the previous section “Results of Operations.” • Total net revenues decreased $32.0 million, primarily due to decreased lemon, avocado and farm management revenue. • Total costs and expenses increased $2.2 million, primarily due to increased impairment of assets and loss on disposal of assets, partially offset by decreased agribusiness costs and selling, general and administrative expenses and the gain on remeasurement of previously held equity method investment. • Total other expense increased $10.2 million, primarily due to increased other expenses related to foreign exchange losses, decreased equity in earnings of investments related to LLCB and increased interest expense, net of patronage dividends. • Income tax benefit increased $10.1 million due to increased pre-tax loss of $44.4 million and the effects of estimated interim tax provisions. 45 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 and equipment loans, 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 July 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, sales of assets, 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 $15.9 million and $7.0 million for the nine months ended July 31, 2026 and 2025, respectively. The significant components of our cash flows used in operating activities were as follows: • Net loss was $34.6 million and $7.4 million for the nine months ended July 31, 2026 and 2025, respectively. The components of net loss for the nine months ended July 31, 2026, compared to net loss for the same period of fiscal year 2025, consists of an increase in operating loss of $25.9 million, an increase in total other expense of $8.4 million, and an increase in income tax benefit of $7.1 million. • Adjustments to reconcile net loss to net cash used in operating activities: ◦ Adjustments were $26.0 million and $16.1 million for the nine months ended July 31, 2026 and 2025, respectively, primarily related to depreciation and amortization, impairment of assets, loss and expected loss on disposal of assets, net, accumulated other comprehensive loss reclassified to earnings, cash distributions from equity investments and deferred income taxes. ◦ Changes in operating assets and liabilities used $7.3 million and $15.7 million of operating cash for the nine months ended July 31, 2026 and 2025, respectively, primarily related to accounts receivables and receivables/other from related parties, 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 $9.5 million and $9.9 million for the nine months ended July 31, 2026 and 2025, respectively. ▪ The $9.5 million of cash used in investing activities for the nine months ended July 31, 2026 was comprised primarily of capital expenditures of $12.2 million, mainly related to orchard development, and equity investment contributions and capitalized interest of $2.8 million, partially offset by net proceeds from sales of assets of $6.3 million. ▪ The $9.9 million of cash used in investing activities for the nine months ended July 31, 2025 was comprised primarily of capital expenditures of $9.6 million, mainly related to orchard and vineyard development, and equity investment contributions and capitalized interest of $2.3 million, partially offset by proceeds from sales of water rights of $1.7 million. 46 Cash Flows from Financing Activities Net cash provided by financing activities was $26.2 million and $15.9 million for the nine months ended July 31, 2026 and 2025, respectively. • The $26.2 million of cash provided by financing activities for the nine months ended July 31, 2026 was comprised primarily of net borrowings of long-term debt of $29.0 million, partially offset by common and preferred dividends of $1.5 million. • The $15.9 million of cash provided by financing activities for the nine months ended July 31, 2025 was comprised primarily of net borrowings of long-term debt of $22.8 million, partially offset by common and preferred dividends of $4.4 million and the exchange of common stock of $1.6 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 July 31, 2026, our outstanding borrowings under the Revolving Credit Supplement were $97.0 million and we had $17.0 million available to borrow. In May 2026, we entered into a Promissory Note and Supplement to the MLA (the “Note”) to provide an additional revolving credit facility supplement with a borrowing capacity of $5.0 million and a maturity date of January 1, 2027. 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 July 31, 2026. In March 2026, we entered into an equipment financing loan with the Lender in an initial amount of $2.3 million which matures on April 1, 2031. In May 2026, we entered into a second equipment financing loan with the Lender in an initial amount of $2.5 million which matures on May 1, 2031. In fiscal years 2026 and 2025, the Lender declared an annual cash patronage dividend, and we received $0.8 million and $0.6 million for the nine months ended July 31, 2026 and 2025, respectively. Real Estate Development Joint Ve nture On April 9, 2025, we received a cash distribution of $10.0 million representing our share of a $20.0 million distribution from the 50/50 joint venture, LLCB, with Lewis. As of July 31, 2026, LLCB had $12.5 million of unaudited cash and cash equivalents on hand. 47 Dividends On March 23, 2026, the Board of Directors (the “Board”) paused regular cash dividends on our outstanding common stock, as well as dividends on our Series B Stock and Series B-2 Preferred Stock, to support strategic capital investments, including transitioning a portion of our agricultural lands to higher-value avocado production and developing new housing. The Board will monitor the incremental increases in cash flow to the Company attributable to these strategic capital investments and expects to resume dividends aligned with historical practice as soon as the Board deems it prudent to do so. The holders of our Series B Stock and Series B-2 Preferred Stock are entitled to receive cumulative cash dividends. Such preferred dividends paid were $0.1 million and $0.4 million for the nine months ended July 31, 2026 and 2025, respectively. As of July 31, 2026, the total dividend arrearages on Series B Stock were $4.38 per share, representing an aggregate allocation of $58,000 and the total dividend arrearages on Series B-2 Preferred Stock were $20.00 per share, representing an aggregate allocation of $186,000. Cash dividends on common stock declared for the nine months ended July 31, 2026 and 2025 were $0.075 and $0.225 per common share, respectively, and such dividends paid were $1.4 million and $4.1 million, respectively. 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, relevant available 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 July 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.