0001133470false00011334702024-06-102024-06-10

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): June 10, 2024

CALAVO GROWERS, INC.

(Exact Name of Registrant as Specified in Charter)

California

   

000-33385

   

33-0945304

(State or Other
Jurisdiction of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

1141-A Cummings Road, Santa Paula, California 93060

(Address of Principal Executive Offices) (Zip Code)

(Former Name or Former Address, if Changed Since Last Report)

Registrant’s telephone number, including area code: (805525-1245

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

   

Trading Symbol(s)

   

Name of each exchange on which registered

Common Stock

CVGW

Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02  Results of Operations and Financial Condition.

On June 10, 2024, Calavo Growers, Inc. (Calavo) issued a press release containing our financial results for the three-month and six-month periods ended April 30, 2024. A copy of our press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

In accordance with General Instruction B.2 of Form 8-K, the information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed by Calavo under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.  Financial Statements and Exhibits.

(d)    Exhibits

99.1

Press release dated June 10, 2024 of the Registrant.

104

Cover Page Interactive Data File (formatted as inline XBRL).

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    

Calavo Growers, Inc.

June 10, 2024

 

By:

/s/ Lecil Cole

Lecil Cole

Chief Executive Officer (Principal Executive Officer)

3

Exhibit 99.1

Graphic

Calavo Growers, Inc. Announces Second Quarter 2024 Financial Results

SANTA PAULA, Calif., Jun. 10, 2024—Calavo Growers, Inc. (Nasdaq-GS: CVGW), a global avocado industry leader and provider of convenient, ready-to-eat fresh food, today reported its financial results for the fiscal second quarter ended April 30, 2024.

Second Quarter Financial Overview

Introductory Note: In the first quarter of 2024, we concluded that the fresh cut (formerly RFG) business meets the requirements to be classified as held for sale and discontinued operations. As a result, the financial results of that business are reported as discontinued operations in this press release. Prior to the decision to divest our fresh cut business, the Company’s Prepared reporting segment included the fresh cut business unit and our guacamole business. Due to the planned divestiture, the fresh cut business unit is no longer included in our Prepared business segment. Retrospective reclassifications also have been made to prior period financial statements and commentary in this press release to present the fresh cut business unit as discontinued operations. Unless otherwise noted, amounts and commentary included in this press release relate to our continuing operations.

Total net sales of $184.4 million, a 16.5% increase from the prior year quarter
oGrown segment net sales increased 18.9% to $166.8 million
oPrepared segment net sales decreased 1.9% to $17.6 million
Gross profit of $20.4 million, compared to $15.7 million for the prior year quarter
oGrown segment gross profit increased $3.5 million to $16.0 million
oPrepared segment gross profit increased $1.2 million to $4.3 million
Net income from continuing operations of $6.5 million, or $0.36 per diluted share, compared to net income of $1.4 million, or $0.08 per diluted share, for the same period last year
Adjusted net income of $8.9 million, or $0.50 per diluted share, compared to adjusted net income of $5.1 million, or $0.29 per diluted share for the prior year quarter
Adjusted EBITDA of $13.4 million compared to $9.9 million for the same period last year

Adjusted net income (loss), adjusted net income (loss) per diluted share, and adjusted EBITDA are non-GAAP financial measures. See “Non-GAAP Financial Measures” below.

Second Quarter Highlights for Continuing Operations

Grown gross profit increased 27% versus the prior year quarter, driven by strength in avocado margins as well as strong performance in tomatoes
Prepared gross profit from continuing operations increased 40%
The investigation into potential issues under the Foreign Corrupt Practices Act (FCPA) is progressing and the company is continuing to fully cooperate with the SEC and the DOJ. Although unanticipated issues may arise, we currently expect the costs associated with the investigation effort to decline beginning in the third quarter.
The Board declared a quarterly cash dividend of $0.10 per share to be paid on July 30, 2024, to shareholders of record on July 2, 2024


Calavo Growers, Inc.

Page 2 of 10

Management Commentary

“We are pleased with our second quarter results which reflect strong operational performance across our portfolio, demonstrating Calavo’s earnings capacity,” said Lee Cole, President and Chief Executive Officer of Calavo Growers, Inc. “Improved prices and margins in our core avocado business as well as in our tomato portfolio both sequentially and versus the prior year contributed to our results. We also improved our guacamole business meaningfully versus the prior year through favorable input costs and operational efficiency. The third quarter is off to a great start and we expect strong results as we remain focused on maximizing value in our core businesses.”

“We have been working diligently to complete the sale of the fresh cut business. Some of the terms, including price and structure, remain under negotiation, and we are targeting completion of the sale process during the fiscal third quarter.”

Second Quarter 2024 Consolidated Financial Review for Continuing Operations

Total net sales for the second quarter 2024 continuing operations were $184.4 million, compared to $158.3 million for the second quarter 2023, an increase of 16.5%. Grown segment sales increased 18.9%, and Prepared segment sales decreased 1.9%. The average selling price of avocados in the Grown segment increased by 28% compared to the prior year.

Gross profit for the second quarter was $20.4 million, or 11.0% of net sales, compared to $15.7 million and 9.9%, respectively, for the same period last year.

Selling, general and administrative (SG&A) expenses for continuing operations for the second quarter totaled $13.0 million, or 7.1% of net sales, compared to $13.4 million and 8.4% of net sales for the same period last year. The decrease versus the prior year was driven primarily by lower compensation expenses while non-recurring professional fees associated with the FCPA investigation increased expenses by $2.7 million. SG&A expenses in the prior year quarter included $2.4 million related to severance and restructuring.

Net income for the second quarter was $6.5 million, or $0.36 per diluted share. This compares with net income of $1.4 million, or $0.08 per diluted share, for the same period last year.

Adjusted net income was $8.9 million, or $0.50 per diluted share, compared to adjusted net income of $5.1 million, or $0.29 per diluted share last year.

Adjusted EBITDA was $13.4 million compared to $9.9 million for the same period last year.

Balance Sheet and Liquidity

The Company ended the quarter with $48.5 million of net debt, which included $45.8 million of borrowings under its credit facility and $7.0 million of other long-term obligations and finance leases, less cash and cash equivalents of $4.3 million. The Company had approximately $47.3 million of liquidity as of April 30, 2024.

Segment Performance

Grown

Grown segment gross profit was $16.0 million, or $3.5 million above the prior year quarter. Gross profit per case for avocados was significantly higher than in the year-ago quarter, while volume declined 13% as we continue to prioritize margin over volume in our sourcing and sales decisions. Avocado prices were approximately 28% higher than in the prior year quarter. Gross profit in our tomato business more than doubled as both volume and prices were higher than last year. The quarter included balance sheet translation losses related to the weakening of the peso of $0.3 million compared to a gain of $1 million in the prior year. Looking ahead, we expect robust performance to continue in the third quarter.

Prepared (continuing operations)

Prepared segment gross profit improved $1.2 million to $4.3 million from the prior year quarter. Gross margin rose to 24% from 17% in the prior year quarter primarily driven by lower fruit input costs and the divestiture of the salsa business.


Calavo Growers, Inc.

Page 3 of 10

Non-GAAP Financial Measures

This press release includes non-GAAP measures EBITDA from continuing operations, adjusted EBITDA from continuing operations, adjusted net income (loss) from continuing operations and adjusted net income (loss) from continuing operations per diluted share, which are not prepared in accordance with U.S. generally accepted accounting principles, or “GAAP.” EBITDA from continuing operations is defined as net income (loss) from continuing operations attributable to Calavo Growers, Inc. excluding (1) interest income and expense, (2) income tax (benefit) provision, (3) depreciation and amortization and (4) stock-based compensation expense. Adjusted EBITDA is EBITDA with further adjustments for (1) non-cash net losses (income) recognized from unconsolidated entities, (2) goodwill impairment, (3) write-off of long-lived assets, (4) acquisition-related costs, (5) restructuring-related costs, including certain severance costs, (6) certain litigation and other related costs, and (7) one-time items. Adjusted EBITDA from continuing operations is a primary metric by which management evaluates the operating performance of the business, on which certain operating expenditures and internal budgets are based. Additionally, the Company’s senior management is compensated in part on the basis of Adjusted EBITDA. The adjustments to calculate EBITDA from continuing operations and adjusted EBITDA from continuing operations are items recognized and recorded under GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded.

Adjusted net income (loss) from continuing operations is defined as net income (loss) from continuing operations attributable to Calavo Growers, Inc. excluding (1) non-cash net losses recognized from unconsolidated entities, (2) goodwill impairment, (3) write-off of long-lived assets, (4) acquisition-related costs, (5) restructuring-related costs, including certain severance costs, (6) certain litigation and other related costs, and (7) one-time items. Adjusted net income (loss) from continuing operations and the related measure of adjusted net income (loss) from continuing operations per diluted share exclude certain items that are recognized and recorded under GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded. We believe adjusted net income (loss) from continuing operations affords investors a different view of the overall financial performance of the Company than adjusted EBITDA and the GAAP measure of net income (loss) attributable from continuing operations to Calavo Growers, Inc.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the financial tables below. Items are considered one-time in nature if they are non-recurring, infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. Non-GAAP information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP. None of these metrics are presented as measures of liquidity. The way the Company measures EBITDA from continuing operations, adjusted EBITDA from continuing operations and adjusted net income (loss) from continuing operations may not be comparable to similarly titled measures presented by other companies and may not be identical to corresponding measures used in Company agreements.

About Calavo Growers, Inc.

Calavo Growers, Inc. (Nasdaq: CVGW) is a global leader in high quality produce, including avocados, tomatoes and papayas, and a pioneer of healthy fresh-cut fruit, vegetables and prepared foods. Calavo products are sold under the trusted Calavo brand name, proprietary sub-brands, private label and store brands. Founded in 1924, Calavo has a rich culture of innovation, sustainable practices and market growth. The company serves retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers worldwide. Calavo is headquartered in Santa Paula, California, with processing plants and packing facilities throughout the U.S. and Mexico. Learn more about The Family of Fresh™ at calavo.com.


Calavo Growers, Inc.

Page 4 of 10

Safe Harbor Statement

This press release contains statements relating to future events and results of Calavo (including financial projections and business trends) that are “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, that involve risks, uncertainties, and assumptions. These statements are based on our current expectations and are not promises or guarantees. If any of the risks or uncertainties materialize or the assumptions prove incorrect, the results of Calavo may differ materially from those expressed or implied by such forward-looking statements and assumptions. The use of words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements.

Risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied by the forward-looking statements include, but are not limited to, the following: the ability of our management team to work together successfully; the impact of operational and restructuring initiatives on our business, results of operations, and financial condition, including uncertainty as to whether the desired effects will be achieved; the impact of weather on market prices and operational costs; seasonality of our business; sensitivity of our business to changes in market prices of avocados and other agricultural products and other raw materials including fuel, packaging and paper; potential disruptions to our supply chain; risks associated with potential future acquisitions, including integration; potential exposure to data breaches and other cyber-attacks on our systems or those of our suppliers or customers; dependence on large customers; dependence on key personnel and access to labor necessary for us to render services; susceptibility to wage inflation; potential for labor disputes; reliance on co-packers for a portion of our production needs; competitive pressures, including from foreign growers; risks of recalls and food-related injuries to our customers; changing consumer preferences; the impact of environmental regulations, including those related to climate change; risks associated with the environment and climate change, especially as they may affect our sources of supply; our ability to develop and transition new products and services and enhance existing products and services to meet customer needs; risks associated with doing business internationally (including possible restrictive U.S. and foreign governmental actions, such as restrictions on transfers of funds and trade protection measures such as import/export/customs duties, tariffs and/or quotas and currency fluctuations); risks associated with receivables from, loans to and/or equity investments in unconsolidated entities; volatility in the value of our common stock; the impact of macroeconomic trends and events; the effects of increased interest rates on our cost of borrowing and consumer purchasing behavior; the resolution of pending investigations, legal claims and tax disputes, including an assessment imposed by the Mexican Tax Administrative Service (the “SAT”) and our defenses against collection activities commenced by the SAT; the impact of other pending and potential internal and external investigations and legal claims; the ability of the parties to reach a binding agreement for the proposed sale of our Fresh Cut business and certain related real property, the potential that the price, structure, form of consideration (for example, cash, promissory, equity) and other material terms may be materially different than currently expected, the continuing financial and operating performance of the Fresh Cut business during the negotiation process; the possible effect of the announcement of the sale of the Fresh Cut business on our customer, vendor and supplier relationships, operating results and business generally; if the Company enters into a binding agreement for the proposed transaction, the occurrence of any event, change or other circumstance that prevents the completion of the proposed transaction, including the failure to satisfy all closing conditions that are included in such binding agreement; and if the potential transaction closes, our ability to realize the expected expense savings from the divestiture.

For a further discussion of these risks and uncertainties and other risks and uncertainties that we face, please see the risk factors described in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent updates that may be contained in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Forward-looking statements contained in this press release are made only as of the date of this press release, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Contact

Julie Kegley, Senior Vice President

Financial Profiles, Inc.

calavo@finprofiles.com

310-622-8246


Calavo Growers, Inc.

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CALAVO GROWERS, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands)

    

April 30,

    

October 31,

2024

2023

Assets

Current assets:

Cash and cash equivalents

$

4,273

$

2,091

Restricted cash

761

Accounts receivable, net of allowances of $4,127 (2024) and $3,364 (2023)

56,142

33,897

Inventories

41,554

31,571

Prepaid expenses and other current assets

8,188

11,739

Advances to suppliers

11,196

14,684

Current assets held for sale

138,927

37,533

Income taxes receivable

2,064

1,094

Total current assets

262,344

133,370

Property, plant, and equipment, net

57,796

60,924

Operating lease right-of-use assets

16,664

18,357

Investments in unconsolidated entities

3,107

2,902

Deferred income tax assets

3,010

3,010

Goodwill

10,211

10,211

Non-current assets held for sale

105,424

Intangibles, net

275

275

Other assets

57,962

52,381

$

411,369

$

386,854

Liabilities and shareholders' equity

Current liabilities:

Payable to growers

$

37,491

$

14,788

Trade accounts payable

6,505

5,097

Accrued expenses

19,829

15,809

Current liabilities held for sale

53,261

29,911

Other current liabilities

11,000

11,000

Current portion of term loan

813

647

Current portion of operating leases

3,401

3,663

Current portion of long-term obligations and finance leases

882

831

Total current liabilities

133,182

81,746

Long-term liabilities:

Borrowings pursuant to line of credit, long-term

42,025

35,024

Long-term liabilities held for sale

29,295

Long-term portion of term loan

3,009

3,416

Long-term portion of operating leases

15,759

17,328

Long-term portion of obligations and finance leases

4,708

4,645

Deferred income tax liabilities

746

746

Other long-term liabilities

4,609

4,425

Total long-term liabilities

70,856

94,879

Commitments and contingencies

Shareholders' equity:

Total shareholders' equity

207,331

210,229

$

411,369

$

386,854


Calavo Growers, Inc.

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CALAVO GROWERS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

    

Three months ended

    

Six months ended

April 30,

April 30,

    

2024

    

2023

    

2024

    

2023

Net sales

$

184,383

$

158,279

$

311,989

$

291,042

Cost of sales

164,026

142,608

279,164

262,286

Gross profit

20,357

15,671

32,825

28,756

Selling, general and administrative

13,020

13,361

26,483

25,003

Expenses related to Mexican tax matters

202

386

585

2,434

Operating income

7,135

1,924

5,757

1,319

Interest expense

(962)

(244)

(1,786)

(621)

Other income, net

520

307

720

647

Income before income taxes and loss from unconsolidated entities

6,693

1,987

4,691

1,345

Income tax expense

(390)

(484)

(963)

(443)

Net income (loss) from unconsolidated entities

204

(56)

205

100

Net income from continuing operations

6,507

1,447

3,933

1,002

Net loss from discontinued operations

(408)

(5,407)

(4,091)

(7,757)

Net income (loss)

6,099

(3,960)

(158)

(6,755)

Add: Net income attributable to noncontrolling interest

(37)

(35)

(47)

(308)

Net income (loss) attributable to Calavo Growers, Inc.

$

6,062

$

(3,995)

$

(205)

$

(7,063)

Calavo Growers, Inc.’s net income (loss) per share:

Basic

Continuing Operations

$

0.36

$

0.08

$

0.22

$

0.04

Discontinued Operations

$

(0.02)

$

(0.31)

$

(0.23)

$

(0.44)

Net income (loss) attributable to Calavo Growers, Inc

$

0.34

$

(0.23)

$

(0.01)

$

(0.40)

Diluted

Continuing Operations

$

0.36

$

0.08

$

0.22

$

0.04

Discontinued Operations

$

(0.02)

$

(0.31)

$

(0.23)

$

(0.44)

Net income (loss) attributable to Calavo Growers, Inc

$

0.34

$

(0.23)

$

(0.01)

$

(0.40)

Number of shares used in per share computation:

Basic

17,800

17,721

17,800

17,697

Diluted

17,872

17,883

17,866

17,857


Calavo Growers, Inc.

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CALAVO GROWERS, INC.

NET SALES AND GROSS PROFIT BY BUSINESS SEGMENT (UNAUDITED)

(in thousands)

Prior to the decision to divest our Fresh Cut business (formerly RFG), the Company’s Prepared reporting segment included the Fresh Cut business unit and our guacamole business. As a result of the planned divestiture, the Fresh Cut business unit is no longer included in our Prepared business segment, and it is not included in the tables below. All segment information included herein reflects these changes.

    

Grown

    

Prepared

    

Total

(All amounts are presented in thousands)

Three months ended April 30, 2024

Net sales

$

166,755

$

17,628

$

184,383

Cost of sales

150,706

13,320

164,026

Gross profit

$

16,049

$

4,308

$

20,357

Three months ended April 30, 2023

Net sales

$

140,301

$

17,978

$

158,279

Cost of sales

127,702

14,906

142,608

Gross profit

$

12,599

$

3,072

$

15,671

    

Grown

    

Prepared

    

Total

(All amounts are presented in thousands)

Six months ended April 30, 2024

Net sales

$

279,781

$

32,208

$

311,989

Cost of sales

255,594

23,570

279,164

Gross profit

$

24,187

$

8,638

$

32,825

Six months ended April 30, 2023

Net sales

$

258,050

$

32,992

$

291,042

Cost of sales

235,970

26,316

262,286

Gross profit

$

22,080

$

6,676

$

28,756

For the three months ended April 30, 2024 and 2023, intercompany sales and cost of sales of $0.2 million and $0.4 million between Grown products and Prepared products were eliminated, respectively. For the six months ended April 30, 2024 and 2023, intercompany sales and cost of sales of $0.6 million and $0.7 million between Grown products and Prepared products were eliminated, respectively.


Calavo Growers, Inc.

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CALAVO GROWERS, INC.

RECONCILIATION OF ADJUSTED NET INCOME FROM CONTINUING OPERATIONS

AND EPS FROM CONTINUING OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

The following table presents adjusted net income (loss) from continuing operations and adjusted diluted EPS from continuing operations, each a non-GAAP measure, and reconciles them to net income (loss) from continuing operations., and Diluted EPS from continuing operations, which are the most directly comparable GAAP measures. See “Non-GAAP Financial Measures” earlier in this release.

    

Three months ended
April 30,

    

Six months ended
April 30,

    

2024

    

2023

    

2024

    

2023

Net income from continuing operations

$

6,507

$

1,447

$

3,933

$

1,002

Add: Net income attributable to noncontrolling interest

(37)

(35)

(47)

(308)

Net income from continuing operations attributable to Calavo Growers, Inc.

6,470

1,412

3,886

694

Non-GAAP adjustments:

Non-cash (income) loss recognized from unconsolidated entities (a)

(204)

56

(205)

(100)

Impairment, losses and charges related to property, plant and equipment (b)

235

235

Restructure costs - consulting, management recruiting and severance (c)

550

3,557

1,037

3,760

Expenses related to Mexican tax matters (d)

202

386

585

2,434

Legal settlement and related expenses (e)

700

700

Professional fees related to FCPA Mexico investigation (f)

2,656

5,036

Tax impact of adjustments (g)

(774)

(1,206)

(1,613)

(1,757)

Adjusted net income from continuing operations

$

8,900

$

5,140

$

8,726

$

5,966

Calavo Growers, Inc.’s continuing operations per share:

Diluted EPS from continuing operations (GAAP)

$

0.36

$

0.08

$

0.22

$

0.04

Adjusted net income from continuing operations per diluted share

$

0.50

$

0.29

$

0.49

$

0.33

Number of shares used in per share computation:

Diluted

17,872

17,883

17,866

17,857


(a)

For the three months ended April 30, 2024 and 2023, we realized income of $0.2 million and losses of $0.1 million from Agricola Don Memo. For the six months ended April 30, 2024 and 2023, we realized income of $0.2 million and income of $0.1 million from Agricola Don Memo.

(b)

On April 1, 2023, we completed the divesture of our salsa business in our Prepared segment and incurred $0.2 million in losses related to the disposal of property, plant and equipment.

(c)

For the three months ended April 30, 2024, we incurred $0.6 million in severance and other costs related to the departure of certain members of management. For the six months ended April 30, 2024, we incurred $0.9 million in severance and other costs and $0.1 million in stock-based compensation related to the departure of certain members of management.

For the three and six months ended April 30, 2023, we recorded $0.6 million in severance costs as part of U.S. restructuring efforts. In addition, we incurred $1.2 million in severance and other costs and $1.2 million in stock-based compensation related to the departure of our former Chief Executive Officer. Additionally, we incurred $0.6 million related to the divesture of Salsa Lisa.

(d)

For the three and six months ended April 30, 2024, we incurred $0.2 million and $0.6 million of professional fees related to the Mexican tax matters, respectively. For the three and six months ended April 30, 2023, we recognized a reserve of $0.4 million and $2.4 million related to the Mexican tax matters, respectively.


Calavo Growers, Inc.

Page 9 of 10

(e)

For the three and six months ended April 30, 2023, we accrued $0.6 million in a legal settlement from a dispute from over 5 years ago connected to an old unused distribution agreement that was entered into over a decade ago.  This legal settlement was considered out of the ordinary due to the length of time it took to settle and since we have not done business with this party for many years.  There are no other similar matters outstanding. In addition, we incurred $0.1 million in associated legal fees.

(f)

For the three and six months ended April 30, 2024, we incurred $2.7 million and $5.0 million of professional fee expenses related to the FCPA investigation in Mexico, respectively.

(g)

Tax impact of non-GAAP adjustments are based on effective year-to-date tax rates.


Calavo Growers, Inc.

Page 10 of 10

CALAVO GROWERS, INC.

RECONCILIATION OF EBITDA FROM CONTINUING OPERATIONS AND ADJUSTED EBITDA
FROM CONTINUING OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

The following table presents EBITDA from continuing operations and adjusted EBITDA from continuing operations, each a non-GAAP measure, and reconciles them to net income (loss) from continuing operations, which is the most directly comparable GAAP measure. See “Non-GAAP Financial Measures” earlier in this release.

    

Three months ended
April 30,

    

Six months ended
April 30,

    

2024

    

2023

    

2024

    

2023

Net income from continuing operations

$

6,507

$

1,447

$

3,933

$

1,002

Add: Net income attributable to noncontrolling interest

(37)

(35)

(47)

(308)

Net income from continuing operations attributable to Calavo Growers, Inc.

6,470

1,412

3,886

694

Interest Income

(115)

(90)

(240)

(363)

Interest Expense

962

244

1,786

621

Provision for Income Taxes

390

484

963

443

Depreciation and Amortization

2,078

2,070

4,110

4,024

Stock-Based Compensation

456

2,113

1,348

3,305

EBITDA from continuing operations

$

10,241

$

6,233

$

11,853

$

8,724

Adjustments:

Non-cash (income) loss recognized from unconsolidated entities (a)

(204)

56

(205)

(100)

Impairment, losses and charges related to property, plant and equipment (b)

235

235

Restructure costs - consulting and management recruiting and severance (c)

550

2,327

967

2,530

Expenses related to Mexican tax matters (d)

202

386

585

2,434

Legal settlement and related expenses (e)

700

700

Professional fees related to FCPA Mexico investigation (f)

2,656

5,036

Adjusted EBITDA from continuing operations

$

13,445

$

9,937

$

18,236

$

14,523


See prior page for footnote references