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

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.)

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (805) 525-1245

     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:

	o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02 Results of Operations and Financial Condition.

(a)		On September 5, 2008, we issued a press release containing our financial results for the quarter ended July 31, 2008. A copy of our press release is attached hereto as Exhibit 99.1 and is incorporated by reference.

Item 9.01. Financial Statements and Exhibits.

(b) Exhibits

99.1		Press release dated September 5, 2008 of the Registrant.

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.
September 5, 2008
		By:		/s/ Lecil E. Cole
		Lecil E. Cole
		Chairman of the Board of Directors, Chief Executive Officer and President
		(Principal Executive Officer)

Exhibit 99.1

For:		Calavo Growers, Inc. (Nasdaq-GM: CVGW)
Contact:		Calavo Growers, Inc.
		Lee Cole
		Chairman, President & CEO
		805-525-1245

CALAVO GROWERS, INC. ANNOUNCES
FISCAL 2008 THIRD QUARTER, NINE-MONTH RESULTS

Third-Quarter Highlights Include:

	§		Revenues Increase 6.1 Percent to $96.9 Million
	§		Processed Product Sales Climb for 13th Consecutive Quarter on Addition of New National Retail Account
	§		California Avocado Sales and Volume Rise Year to Year

SANTA PAULA, Calif. (Sept. 5, 2008)—Calavo Growers, Inc. (Nasdaq-GM: CVGW), a global leader in avocado marketing and an expanding provider of other fresh perishable produce items, today reported higher revenues for its fiscal 2008 third quarter and the year to date. While maintaining solid profitability, the company’s net income for the three- and nine-month periods declined, principally due to the higher cost of Mexican-grown avocados, which adversely impacted margins in both fresh and processed-product operations.

     For the three months ended July 31, 2008, the company posted net income of $1.4 million, equal to $0.10 per diluted share, on $96.9 million in revenues. This compares to net income of $2.2 million, or $0.15 per diluted share, on revenues of $91.3 million in the fiscal 2007 third quarter. Gross margin as a percentage of revenues totaled 7.9 percent, a decrease of 151 basis points from 9.5 percent in the prior year’s third period as a result of the aforementioned higher Mexican avocado prices.

     Nine-month revenues increased 23 percent to $267.9 million from $217.7 million in the corresponding period of fiscal 2007. Fiscal-year-to-date net income approximates $3.7 million, equal to $0.26 per diluted share. This compares with net income of $6.1 million, or $0.43 per diluted share in the first

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Calavo Growers Reports Fiscal 2008 Third Quarter Results/2-2-2

nine months of fiscal 2007. Year-to-date gross margin as a percentage of revenues is 7.8 percent, which compares to 11.4 percent in the first nine months of 2007.

     “A significant factor in Calavo’s fiscal third quarter performance—and a principal differentiator in year-over-year operating results—was a short supply of Mexican-grown avocados that resulted in sharply higher costs for fruit sourced from that region,” said Lee E. Cole, chairman, president and chief executive officer. “Despite this challenge, our company remains consistently profitable, while enjoying year-to-date sales growth of 23 percent—a testament, respectively, to our multiple-platform business model and leveraging new commodity products across Calavo’s existing infrastructure. Our results are especially gratifying when placed in the context of a struggling broader economy, a weak U.S. dollar and surging costs around the globe.”

     Cole elaborated that the higher Mexican avocado costs that have characterized much of the current fiscal year have begun to trend downward. “We are encountering a more favorable pricing environment and increasingly ample fruit supply across the border,” he said.

     Commenting on Calavo’s fresh avocado operations, Cole indicated that results in the Fresh Products segment were paced in part by the recovery of the California crop, where a larger harvest quarter to quarter propelled sales and enabled better overhead utilization in its two domestic packinghouses. The improved California harvest, which continues to rebound from effects of the winter 2007 frost, helped mitigate the impact of the higher fruit costs for fresh avocados sourced from Mexico. Fresh Avocado segment sales in the fiscal third quarter climbed 6.7 percent to $84.8 million from $79.5 million in the like period one year ago. Year-to-date Fresh Avocado revenues advanced to $234.0 million, a 25.3 percent increase from $187.5 in the initial nine months of fiscal 2007.

     In Calavo’s Processed Product business segment, net sales advanced for the 13^th consecutive quarter, increasing to $12.1 million from $11.8 million in the

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Calavo Growers Reports Fiscal 2008 Third Quarter Results/3-3-3

corresponding period last year. Processed unit revenue growth in the third quarter reflected opening national distribution for Calavo’s ultra-high pressure guacamole to a major retail chain. Year to date, processed segment revenues have advanced 9.5 percent to $33.0 million from $30.2 million in the initial nine months last year. CEO Cole said gross margin pressures have been particularly pronounced in the processed unit, where “operations are entirely reliant on avocados from Mexico and, as a result, have borne the brunt of these higher fruit costs.”

     The company continues to apply its rigorous cost containment discipline to selling, general and administrative (SG&A) expense. In the fiscal third quarter, SG&A rose approximately $500,000, equal to 10 percent, to $5.3 million. SG&A as a percentage of revenues climbed modestly to 5.5 percent, up approximately 20 basis points from 5.3 percent in last year’s third quarter. However, a significant portion of that increase is attributable to sales commissions associated with the aforementioned new national processed-guacamole account.

     SG&A expense year to date has climbed just $590,000, or four percent, to $14.8 million, while supporting more than $50 million in additional revenue. As a percentage of revenues, SG&A for the year to date has declined 100 basis points to 5.5 percent from 6.5 percent in the initial nine months of fiscal 2007, owing to certain economies of scale as Calavo folds sales of new products into its existing fixed-cost structure.

Looking Ahead: Fiscal 2008 Fourth Quarter, Fiscal 2009

     CEO Cole said that he and his management team remain focused on implementing the company’s strategic agenda. “We have a well-defined plan for growing our various business operations and, while that may be subject to certain quarterly fluctuations inherent to the produce industry, our outlook and the opportunities for Calavo over the longer term are compelling,” he said.

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Calavo Growers Reports Fiscal 2008 Third Quarter Results/4-4-4

     With respect to the final quarter of this fiscal year and fiscal 2009, Cole said Calavo does not expect to realize all the benefits of the downward trend in Mexican fruit prices during the fourth period. However, the company anticipates realizing significant gross margin benefits in fiscal 2009.

     “We look forward to concluding a successful fiscal 2008 in which we continue to put in place the underpinnings and infrastructure that will drive our future growth,” Cole concluded.

About Calavo

     Calavo Growers, Inc. is a worldwide leader in the procurement and marketing of fresh avocados and other perishable foods, as well as the manufacturing and distribution of processed avocado products. Founded in 1924, Calavo’s expertise in marketing and distributing avocados, processed avocados and other perishable foods allows the company to deliver a wide array of fresh and processed food products to food distributors, produce wholesalers, supermarkets and restaurants on a global basis.

Safe Harbor Statement

     This news release contains statements relating to future events and results of Calavo (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: increased competition, conducting substantial amounts of business internationally, pricing pressures on agricultural products, adverse weather and growing conditions confronting avocado growers, new governmental regulations, as well as other risks and uncertainties detailed from time to time in the company’s Securities and Exchange Commission filings, including, without

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Calavo Growers Reports Fiscal 2008 Third Quarter Results/5-5-5

limitation, the company’s Report on Form 10-K for the year ended October 31, 2007. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

# # #

CALAVO GROWERS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(All amounts in thousands, except per share amounts)

		July 31,				October 31,
		2008				2007
Assets
Current assets:
Cash and cash equivalents		$	313			$	967
Accounts receivable, net of allowances of $2,432 (2008) and $2,271 (2007)			34,079				25,992
Inventories, net			16,938				8,359
Prepaid expenses and other current assets			4,567				4,911
Advances to suppliers			1,891				2,292
Income tax receivable			—				1,539
Deferred income taxes			2,525				2,525
Total current assets			60,313				46,585
Property, plant, and equipment, net			33,075				20,888
Investment in Limoneira			44,079				48,962
Investment in Maui Fresh, LLC			613				403
Goodwill			3,591				3,591
Other assets			7,996				7,589
		$	149,667			$	128,018
Liabilities and shareholders’ equity
Current liabilities:
Payable to growers		$	14,872			$	2,414
Trade accounts payable			3,176				2,643
Accrued expenses			18,442				12,227
Income tax payable			376				—
Short-term borrowings			5,830				6,630
Dividend payable			—				5,030
Current portion of long-term obligations			1,362				1,307
Total current liabilities			44,058				30,251
Long-term liabilities:
Long-term obligations, less current portion			21,672				13,106
Deferred income taxes			8,773				10,658
Total long-term liabilities			30,445				23,764
Commitments and contingencies Total shareholders’ equity			75,164				74,003
		$	149,667			$	128,018

CALAVO GROWERS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts)

		Three months ended								Nine months ended
		July 31,								July 31,
		2008				2007				2008				2007
Net sales		$	96,903			$	91,307			$	267,921			$	217,700
Cost of sales			89,211				82,680				246,906				192,998
Gross margin			7,692				8,627				21,015				24,702
Selling, general and administrative			5,301				4,803				14,752				14,162
Operating income			2,391				3,824				6,263				10,540
Interest expense			(366	)			(315	)			(1,060	)			(996	)
Other income, net			248				68				907				456
Income before provision for income taxes			2,273				3,577				6,110				10,000
Provision for income taxes			884				1,355				2,377				3,860
Net income		$	1,389			$	2,222			$	3,733			$	6,140
Net income per share:
Basic		$	0.10			$	0.16			$	0.26			$	0.43
Diluted		$	0.10			$	0.15			$	0.26			$	0.43
Number of shares used in per share computation:
Basic			14,405				14,300				14,394				14,295
Diluted			14,467				14,452				14,494				14,399

CALAVO GROWERS, INC.
NET SALES AND GROSS MARGIN BY BUSINESS SEGMENT (UNAUDITED)
(All amounts in thousands, except per share amounts)

		Fresh				Processed				Inter-segment
		Products				Products				eliminations				Total
		(All amounts are presented in thousands)
Nine months ended July 31, 2008
Net sales		$	245,079			$	40,343			$	(17,501	)		$	267,921
Cost of sales			230,846				33,561				(17,501	)			246,906
Gross margin		$	14,233			$	6,782				—			$	21,015

		Fresh				Processed				Inter-segment
		Products				Products				eliminations				Total
Nine months ended July 31, 2007
Net sales		$	197,342			$	35,941			$	(15,583	)		$	217,700
Cost of sales			180,899				27,682				(15,583	)			192,998
Gross margin		$	16,443			$	8,259				—			$	24,702

		Fresh				Processed				Inter-segment
		Products				Products				eliminations				Total
Three months ended July 31, 2008
Net sales		$	86,892			$	14,602			$	(4,591	)		$	96,903
Cost of sales			80,734				13,068				(4,591	)			89,211
Gross margin		$	6,158			$	1,534				—			$	7,692

		Fresh				Processed				Inter-segment
		Products				Products				eliminations				Total
Three months ended July 31, 2007
Net sales		$	82,645			$	14,021			$	(5,359	)		$	91,307
Cost of sales			76,142				11,897				(5,359	)			82,680
Gross margin		$	6,503			$	2,124				—			$	8,627