Limoneira CO (LMNR) FY 2025 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of the results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those presented under “Risk Factors” included in Item 1A and elsewhere in this Annual Report on Form 10-K. This section generally discusses the results of operations for fiscal year 2025 compared to fiscal year 2024. For discussion related to the results of operations and changes in financial condition for fiscal year 2024 compared to fiscal year 2023 refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 2024 Form 10-K, which was filed with the United States Securities and Exchange Commission (SEC) on December 23, 2024.
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 10,500 acres of land, water resources and other assets to maximize long-term stockholder value. Our operations consist of fruit production, sales and marketing, rental operations, real estate and capital investment activities.
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, wine grapes and farm management services. The agribusiness division includes our core operations of farming, harvesting, lemon packing and lemon sales 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.
Recent Developments – Refer to Part I, Item 1 “Fiscal Year 2025 Highlights and Recent Developments”
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Results of Operations
The following table shows the results of operations (in thousands):
| Years Ended October 31, | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||||||||||||||||||||
| Net revenues: | ||||||||||||||||||||||||
| Agribusiness | $ | 153,685 | 96 | % | $ | 185,923 | 97 | % | $ | 174,381 | 97 | % | ||||||||||||
| Other operations | 6,038 | 4 | % | 5,580 | 3 | % | 5,520 | 3 | % | |||||||||||||||
| Total net revenues | 159,723 | 100 | % | 191,503 | 100 | % | 179,901 | 100 | % | |||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||
| Agribusiness | 154,810 | 86 | % | 164,807 | 83 | % | 169,169 | 99 | % | |||||||||||||||
| Other operations | 4,477 | 2 | % | 5,274 | 3 | % | 4,612 | 3 | % | |||||||||||||||
| Impairment of intangible asset | — | — | % | 643 | 1 | % | — | — | % | |||||||||||||||
| Gain on sales of water rights | (1,488) | (1) | % | — | — | % | — | — | % | |||||||||||||||
| Loss (gain) on disposal of assets, net | 706 | 1 | % | (507) | (1) | % | (28,849) | (17) | % | |||||||||||||||
| Gain on remeasurement of previously held equity method investment | (2,852) | (2) | % | — | — | % | — | — | % | |||||||||||||||
| Gain on legal settlement | — | — | % | — | — | % | (2,269) | (1) | % | |||||||||||||||
| Selling, general and administrative | 24,475 | 14 | % | 27,464 | 14 | % | 26,455 | 16 | % | |||||||||||||||
| Total costs and expenses | 180,128 | 100 | % | 197,681 | 100 | % | 169,118 | 100 | % | |||||||||||||||
| Operating (loss) income: | ||||||||||||||||||||||||
| Agribusiness | (1,125) | 21,116 | 5,212 | |||||||||||||||||||||
| Other operations | 1,561 | 306 | 908 | |||||||||||||||||||||
| Impairment of intangible asset | — | (643) | — | |||||||||||||||||||||
| Gain on sales of water rights | 1,488 | — | — | |||||||||||||||||||||
| (Loss) gain on disposal of assets, net | (706) | 507 | 28,849 | |||||||||||||||||||||
| Gain on remeasurement of previously held equity method investment | 2,852 | — | — | |||||||||||||||||||||
| Gain on legal settlement | — | — | 2,269 | |||||||||||||||||||||
| Selling, general and administrative | (24,475) | (27,464) | (26,455) | |||||||||||||||||||||
| Operating (loss) income | (20,405) | (6,178) | 10,783 | |||||||||||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||
| Interest income | 62 | 118 | 364 | |||||||||||||||||||||
| Interest expense, net of patronage dividends | (1,553) | (961) | (494) | |||||||||||||||||||||
| Equity in earnings of investments, net | 798 | 18,356 | 5,322 | |||||||||||||||||||||
| Other income (expense), net | 93 | 212 | (2,611) | |||||||||||||||||||||
| Total other (expense) income | (600) | 17,725 | 2,581 | |||||||||||||||||||||
| (Loss) income before income tax benefit (provision) | (21,005) | 11,547 | 13,364 | |||||||||||||||||||||
| Income tax benefit (provision) | 4,649 | (4,373) | (4,247) | |||||||||||||||||||||
| Net (loss) income | (16,356) | 7,174 | 9,117 | |||||||||||||||||||||
| Net loss attributable to noncontrolling interests, net | 375 | 542 | 283 | |||||||||||||||||||||
| Net (loss) income attributable to Limoneira Company | $ | (15,981) | $ | 7,716 | $ | 9,400 |
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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, pension settlement cost, impairment of intangible asset, loss (gain) on disposal of assets, net, cash bonus related to sale of assets, gain on legal settlement, cash severance benefits, contract termination fee and gain on remeasurement of previously held equity method investment are important measures to evaluate our results of operations between periods on a more comparable basis. 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) income 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):
| Fiscal Year Ended October 31, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | ||||||||||||
| Net (loss) income attributable to Limoneira Company | $ | (15,981) | $ | 7,716 | $ | 9,400 | ||||||||
| Interest income | (62) | (118) | (364) | |||||||||||
| Interest expense, net of patronage dividends | 1,553 | 961 | 494 | |||||||||||
| Income tax (benefit) provision | (4,649) | 4,373 | 4,247 | |||||||||||
| Depreciation and amortization | 9,209 | 8,374 | 8,576 | |||||||||||
| EBITDA | $ | (9,930) | $ | 21,306 | $ | 22,353 | ||||||||
| Stock-based compensation | 3,077 | 4,116 | 3,841 | |||||||||||
| Pension settlement cost | — | — | 2,700 | |||||||||||
| Impairment of intangible asset | — | 643 | — | |||||||||||
| Loss (gain) on disposal of assets, net | 706 | (507) | (28,849) | |||||||||||
| Cash bonus related to sale of assets | — | — | 2,000 | |||||||||||
| Gain on legal settlement | — | — | (2,269) | |||||||||||
| Cash severance benefits | 447 | 1,160 | — | |||||||||||
| Contract termination fee | 2,100 | — | — | |||||||||||
| Gain on remeasurement of previously held equity method investment | (2,852) | — | — | |||||||||||
| Adjusted EBITDA | $ | (6,452) | $ | 26,718 | $ | (224) |
Fiscal Year 2025 Compared to Fiscal Year 2024
Revenues
Total net revenues for fiscal year 2025 were $159.7 million, compared to $191.5 million for fiscal year 2024. The 17% decrease of $31.8 million was primarily due to decreased agribusiness revenue from lemons, avocados, wine grapes and farm management, partially offset by increased agribusiness revenues from oranges, as detailed below ($ in thousands):
| Fiscal Year Ended October 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | Change | ||||||||||
| Lemons | $ | 124,958 | $ | 136,175 | $ | (11,217) | (8)% | |||||
| Avocados | 11,741 | 25,114 | (13,373) | (53)% | ||||||||
| Oranges | 7,745 | 5,189 | 2,556 | 49% | ||||||||
| Specialty citrus and wine grapes | 4,010 | 5,089 | (1,079) | (21)% | ||||||||
| Farm management | 1,622 | 10,212 | (8,590) | (84)% | ||||||||
| Other | 3,609 | 4,144 | (535) | (13)% | ||||||||
| Agribusiness revenues | $ | 153,685 | $ | 185,923 | $ | (32,238) | (17)% |
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•Lemons: The decrease for fiscal year 2025, compared to fiscal year 2024, was primarily due to lower prices, partially offset by increased volume of fresh and brokered lemons sold and other lemon sales. Fresh carton sales were $83.8 million and $84.0 million, in aggregate, on 4.7 million and 4.5 million cartons of lemons sold at average per carton prices of $17.74 and $18.87 for fiscal years 2025 and 2024, respectively. Lemon revenue included brokered lemons and other lemon sales of $21.6 million and $32.0 million, packing and handling revenue of $17.9 million and $17.1 million, and lemon by-product sales of $1.7 million and $3.0 million for fiscal years 2025 and 2024, respectively.
•Avocados: The decrease for fiscal year 2025, compared to fiscal year 2024, was due to decreased volume and lower prices of avocados sold. The California avocado crop typically experiences alternating years of high and low production due to plant physiology. We sold 7.4 million and 15.1 million pounds of avocados at average prices per pound of $1.60 and $1.67 for fiscal years 2025 and 2024, respectively.
•Oranges: The increase for fiscal year 2025, compared to fiscal year 2024, was primarily due to increased volume and higher prices of oranges sold. We sold 409,000 and 280,000 cartons of oranges at an average price per carton of $18.93 and $18.53 for fiscal years 2025 and 2024, respectively.
•Specialty citrus and wine grapes: The decrease for fiscal year 2025, compared to fiscal year 2024, was primarily due to decreased volume of wine grapes sold. We sold $1.8 million and $2.9 million of wine grapes during fiscal years 2025 and 2024, respectively.
•Farm management: Farm management revenue was comprised primarily of Northern Properties farming, management and operations services and decreased for fiscal year 2025 compared to fiscal year 2024 due to the FMA termination effective March 31, 2025.
•Other: Other revenue, comprised primarily of fallowing and shipping, decreased for fiscal year 2025, compared to fiscal year 2024, due to decreased shipping revenue.
Other operations revenue for fiscal year 2025 was $6.0 million, compared to $5.6 million for fiscal year 2024.
Costs and Expenses
Total costs and expenses for fiscal year 2025 were $180.1 million, compared to $197.7 million for fiscal year 2024. The 9% decrease of $17.6 million was primarily due to decreased agribusiness costs and expenses and selling, general and administrative expenses. Agribusiness costs and expenses are detailed below ($ in thousands):
| Fiscal Year Ended October 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | Change | ||||||||||
| Packing costs | $ | 47,381 | $ | 42,751 | $ | 4,630 | 11% | |||||
| Harvest costs | 9,495 | 12,585 | (3,090) | (25)% | ||||||||
| Growing costs | 17,510 | 27,577 | (10,067) | (37)% | ||||||||
| Third-party grower and supplier costs | 70,068 | 72,176 | (2,108) | (3)% | ||||||||
| Other costs | 2,113 | 2,601 | (488) | (19)% | ||||||||
| Depreciation and amortization | 8,243 | 7,117 | 1,126 | 16% | ||||||||
| Agribusiness costs and expenses | $ | 154,810 | $ | 164,807 | $ | (9,997) | (6)% |
•Packing costs: Packing costs consist primarily of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs. The increase for fiscal year 2025, compared to fiscal year 2024, was primarily due to increased volume, higher labor costs, and higher packing costs due to a $2.1 million contract termination fee related to our Commercial Packinghouse License Agreement with Sunkist. We packed and sold 4.7 million and 4.5 million cartons of lemons at average per carton costs of $10.03 and $9.60 for fiscal years 2025 and 2024, respectively.
•Harvest costs: The decrease in harvest costs for fiscal year 2025, compared to fiscal year 2024. was primarily due to decreased volume of lemons and avocados harvested.
•Growing costs: Growing costs, also referred to as cultural costs, consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation. The decrease for fiscal year 2025, compared to fiscal year 2024, was primarily due to the decrease in farm management growing costs related to the FMA termination and farm management decisions made in response to weather, harvest timing and crop conditions.
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•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 fiscal year 2025, compared to fiscal year 2024, was primarily due to a decrease in incurred costs for brokered fruit for resale of $27.5 million compared to $31.3 million, respectively, partially offset by an increase in incurred costs of third party grower fruit of $42.5 million compared to $40.9 million, respectively. Of the 4.7 million and 4.5 million cartons of lemons packed and sold, 3.7 million (78%) and 3.2 million (72%) were procured from third-party growers at average per carton prices of $11.55 and $12.76 for fiscal years 2025 and 2024, respectively.
•Other costs: The decrease in other costs for fiscal year 2025, compared to fiscal year 2024, was due to decreased freight costs.
•Depreciation and amortization: The increase in depreciation and amortization expenses for fiscal year 2025, compared to fiscal year 2024, was primarily due to increases in agribusiness depreciation and amortization of finance leases.
Other operations expenses for fiscal year 2025 were $4.5 million compared to $5.3 million for fiscal year 2024. The decrease in other operations expenses was primarily due to severance benefits paid in fiscal year 2024 and decreased residential and commercial rental expenses.
Impairment of intangible asset was $0.6 million for fiscal year 2024. There was no impairment of intangible asset for fiscal year 2025.
Gain on sales of water rights was $1.5 million for fiscal year 2025. There was no sale of water rights for fiscal year 2024.
Loss (gain) on disposal of assets, net for fiscal year 2025 was $0.7 million compared to $(0.5) million for fiscal year 2024. The 2025 loss primarily relates to the disposal of orchards and the 2024 gain primarily relates to a deferred gain on the LLCB II sale.
Selling, general and administrative expenses for fiscal year 2025 were $24.5 million compared to $27.5 million for fiscal year 2024. The $3.0 million decrease was primarily due to:
•$5.3 million net decrease in salaries, benefits and incentive compensation;
•$1.0 million net increase in allowance for receivables from foreign related party, net; and
•$1.3 million net increase in other general and administrative expenses.
Other (Expense) Income
Total other (expense) income for fiscal year 2025 was $(0.6) million compared to $17.7 million for fiscal year 2024. The $18.3 million decrease in total other income was primarily due to:
•$17.6 million decrease of equity in earnings of investments, net, primarily due to LLCB’s closing of 554 residential homesites in fiscal year 2024;
•$0.6 million increase of interest expense, net of patronage dividends; and
•$0.1 million decrease of other income, net.
Income Taxes
We recorded an income tax benefit (provision) of $4.6 million and $(4.4) million on pre-tax (loss) income of $(21.0) million and $11.5 million for fiscal years 2025 and 2024, respectively. The tax benefit recorded for fiscal year 2025 differs from the U.S. federal statutory tax rate of 21.0% primarily due to foreign jurisdictions that are taxed at different rates, state taxes, tax impact of stock-based compensation, executive compensation, nondeductible tax items and valuation allowances on certain deferred tax assets of foreign subsidiaries. Our effective tax rate for fiscal years 2025 and 2024 was 22.1% and 37.9%, respectively.
Net Loss Attributable to Noncontrolling Interests, Net
Net loss attributable to noncontrolling interests represents 10% and 49% of the net loss of PDA and Trapani Fresh, respectively, for fiscal years 2025 and 2024. Fiscal year 2025 includes 45.5% of the net income of Del Mar for the period August 4, 2025 to October 31, 2025.
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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 years’ information has been restated to conform to the current year’s 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 20 - Segment Information for additional information regarding our operating segments.
Segment information for fiscal year 2025 is as follows (in thousands):
| Fresh Lemons | Lemon Packing | Avocados | Other Agribusiness | Total Agribusiness | Corporate and Other | Total | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues from external customers | $ | 75,811 | $ | 49,147 | $ | 11,741 | $ | 16,986 | $ | 153,685 | $ | 6,038 | $ | 159,723 | ||||||
| Costs and expenses, excluding depreciation and amortization: | ||||||||||||||||||||
| Labor and benefits | — | 19,820 | — | — | 19,820 | — | 19,820 | |||||||||||||
| Packing supplies and fruit treatments | — | 13,799 | — | — | 13,799 | — | 13,799 | |||||||||||||
| Harvest costs | 7,777 | — | 1,385 | 333 | 9,495 | — | 9,495 | |||||||||||||
| Growing costs | 8,884 | — | 4,621 | 4,005 | 17,510 | — | 17,510 | |||||||||||||
| Third party grower and supplier costs | 60,928 | — | — | 9,140 | 70,068 | 70,068 | ||||||||||||||
| Other segment items | — | 13,762 | — | 2,113 | 15,875 | 3,786 | 19,661 | |||||||||||||
| Gain on sales of water rights | — | — | — | — | — | (1,488) | (1,488) | |||||||||||||
| Loss on disposal of assets, net | — | — | — | — | — | 706 | 706 | |||||||||||||
| Gain on remeasurement of previously held equity method investment | — | — | — | — | — | (2,852) | (2,852) | |||||||||||||
| Selling, general and administrative | — | — | — | — | — | 24,200 | 24,200 | |||||||||||||
| Total costs and expenses, excluding depreciation and amortization | 77,589 | 47,381 | 6,006 | 15,591 | 146,567 | 24,352 | 170,919 | |||||||||||||
| Depreciation and amortization | — | — | — | — | 8,243 | 966 | 9,209 | |||||||||||||
| Operating (loss) income | $ | (1,778) | $ | 1,766 | $ | 5,735 | $ | 1,395 | $ | (1,125) | $ | (19,280) | $ | (20,405) |
Segment information for fiscal year 2024 is as follows (in thousands):
| Fresh Lemons | Lemon Packing | Avocados | Other Agribusiness | Total Agribusiness | Corporate and Other | Total | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues from external customers | $ | 86,917 | $ | 49,258 | $ | 25,114 | $ | 24,634 | $ | 185,923 | $ | 5,580 | $ | 191,503 | ||||||
| Costs and expenses, excluding depreciation and amortization: | ||||||||||||||||||||
| Labor and benefits | — | 16,841 | — | — | 16,841 | — | 16,841 | |||||||||||||
| Packing supplies and fruit treatments | — | 10,902 | — | — | 10,902 | — | 10,902 | |||||||||||||
| Harvest costs | 8,877 | — | 3,058 | 650 | 12,585 | — | 12,585 | |||||||||||||
| Growing costs | 10,258 | — | 4,276 | 13,043 | 27,577 | — | 27,577 | |||||||||||||
| Third party grower and supplier costs | 65,046 | — | — | 7,130 | 72,176 | — | 72,176 | |||||||||||||
| Other segment items | — | 15,008 | — | 2,601 | 17,609 | 4,605 | 22,214 | |||||||||||||
| Impairment of intangible asset | — | — | — | — | — | 643 | 643 | |||||||||||||
| Gain on disposal of assets, net | — | — | — | — | — | (507) | (507) | |||||||||||||
| Selling, general and administrative | — | — | — | — | — | 26,876 | 26,876 | |||||||||||||
| Costs and expenses, excluding depreciation and amortization: | 84,181 | 42,751 | 7,334 | 23,424 | 157,690 | 31,617 | 189,307 | |||||||||||||
| Depreciation and amortization | — | — | — | — | 7,117 | 1,257 | 8,374 | |||||||||||||
| Operating (loss) income | $ | 2,736 | $ | 6,507 | $ | 17,780 | $ | 1,210 | $ | 21,116 | $ | (27,294) | $ | (6,178) |
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Fiscal Year 2025 Segment Information Compared to Fiscal Year 2024 Segment Information
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 net of pack charge, lemon by-products, brokered lemons and other lemon revenue. Our fresh lemons segment total net revenues for fiscal year 2025 were $75.8 million compared to $86.9 million for fiscal year 2024. The 13% decrease of $11.1 million was primarily due to:
•Brokered lemons and other lemon sales decrease of $10.4 million;
•Lemon by-products sales decrease of $1.3 million; and
•Fresh lemons sales net of pack charge increase of $0.6 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 for fiscal year 2025 were $77.6 million compared to $84.2 million for fiscal year 2024. The 8% decrease of $6.6 million was primarily due to:
•Third-party grower and supplier costs decrease of $4.1 million;
•Growing costs decrease of $1.4 million; and
•Harvest costs decrease of $1.1 million.
Lemon Packing
Lemon packing segment revenue is comprised of packing revenue and packing and handling revenue. Our lemon packing segment total net revenues for fiscal year 2025 were $49.1 million compared to $49.3 million for fiscal year 2024.
Costs and expenses associated with our lemon packing segment consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies, subcontracted and facility operating costs. Our lemon packing costs and expenses for fiscal year 2025 were $47.4 million compared to $42.8 million for fiscal year 2024. The 11% increase of $4.6 million was primarily due to increased volume of lemons packed and sold, higher labor costs, and higher packing costs due to a $2.1 million contract termination fee.
Lemon packing segment operating income per carton sold for fiscal year 2025 was $0.37 compared to $1.46 for fiscal year 2024.
Avocados
Our avocados segment revenue for fiscal year 2025 was $11.7 million compared to $25.1 million for fiscal year 2024. The 53% decrease of $13.4 million was primarily due to decreased volume and lower prices.
Costs and expenses associated with our avocados segment include growing and harvest costs. Our avocados segment costs and expenses for fiscal year 2025 were $6.0 million compared to $7.3 million for fiscal year 2024. The 18% decrease of $1.3 million was primarily due to:
•Harvest costs decrease of $1.7 million; and
•Growing costs increase of $0.4 million.
Other Agribusiness
Our other agribusiness segment total net revenues for fiscal year 2025 were $17.0 million compared to $24.6 million for fiscal year 2024. The 31% decrease of $7.6 million was primarily due to:
•Farm management revenue decrease of $8.6 million;
•Specialty citrus and wine grape revenues decrease of $1.1 million;
•Other revenue decrease of $0.5 million; and
•Orange revenue increase of $2.6 million.
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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 for fiscal year 2025 were $15.6 million compared to $23.4 million for fiscal year 2024. The 33% decrease of $7.8 million was primarily due to:
•Growing costs decrease of $9.0 million;
•Shipping costs decrease of $0.5 million;
•Harvest costs decrease of $0.3 million; and
•Brokered fruit costs increase of $2.0 million.
Total agribusiness depreciation and amortization expenses for fiscal year 2025 were $8.2 million compared to $7.1 million for fiscal year 2024.
Corporate and Other
Our corporate and other operations revenues for fiscal year 2025 were $6.0 million compared to $5.6 million for fiscal year 2024.
Costs and expenses in our corporate and other operations for fiscal years 2025 and 2024 were $24.4 million and $31.6 million, respectively, and include selling, general and administrative costs and expenses, impairment of intangible asset, gain on sales of water rights, loss (gain) on disposal of assets and gain on remeasurement of previously held equity method investment not allocated to the operating segments. Depreciation and amortization expenses for fiscal year 2025 were $1.0 million compared to $1.3 million for fiscal year 2024.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are cash and cash flows generated from our operations, use of our revolving credit facility, sales of assets and distributions from our equity investments. Our liquidity and capital position fluctuate during the year depending on seasonal production cycles, weather events and demand for our products. Typically, our first and last fiscal quarters coincide with the fall and winter months during which we are growing crops that are harvested and sold in the spring and summer, which are our second and third 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, long-term variable rate debt and related interest payments and operating and finance leases. See Note 11 - Long-Term Debt and Note 12 - Leases for amounts outstanding as of October 31, 2025, related to debt and leases. Purchase obligations consist of contracts primarily related to packing supplies, the majority of which are due in the next three years.
We believe that the cash flows from operations and available borrowing capacity from our existing credit facilities will be sufficient to satisfy our capital expenditures, debt service, working capital needs and other contractual obligations for the next 12 months. We believe our revenue generating operations, distributions from equity investments and credit facilities will generate sufficient cash needed to operate beyond the next 12 months. In addition, we have the ability to control a portion of our investing and financing cash flows to the extent necessary based on our liquidity demands.
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Cash Flows from Operating Activities
Net cash (used in) provided by operating activities was $(6.0) million and $17.9 million for fiscal years 2025 and 2024, respectively. The significant components of our cash flows (used in) provided by operating activities were as follows:
•Net (loss) income was $(16.4) million and $7.2 million for fiscal years 2025 and 2024, respectively. The components of net loss for fiscal year 2025, compared to net income for fiscal year 2024, primarily consists of an increase in operating loss of $14.2 million, a decrease in total other income of $18.3 million and an increase in income tax benefit of $9.0 million.
•Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
◦Adjustments provided $15.2 million and $9.0 million for fiscal years 2025 and 2024, respectively, primarily related to depreciation and amortization, gain on remeasurement of previously held equity method investment, gain on sales of water rights, stock compensation expense, equity in earnings of investments, net, cash distributions from equity investments and deferred income taxes.
◦Changes in operating assets and liabilities used $4.9 million and provided $1.7 million of operating cash for fiscal years 2025 and 2024, respectively, primarily related to accounts payable/growers and suppliers payable, accrued liabilities/payables to related parties, income taxes receivable and other long-term liabilities.
Cash Flows from Investing Activities
▪The $18.3 million of net cash used in investing activities for fiscal year 2025 was comprised primarily of capital expenditures of $13.5 million mainly related to orchard development and $4.1 million related to acquiring additional shares of Del Mar.
▪The $9.2 million of net cash used in investing activities for fiscal year 2024 was comprised primarily of capital expenditures of $9.4 million related to orchard and vineyard development.
Cash Flows from Financing Activities
•The $22.8 million of net cash provided by financing activities for fiscal year 2025 was comprised primarily of net borrowings of long-term debt of $31.9 million, partially offset by common and preferred stock dividends of $5.9 million and exchange of common stock of $2.0 million.
•The $9.3 million of net cash used in financing activities for fiscal year 2024 was comprised primarily of common and preferred stock dividends of $5.9 million and exchange of common stock of $2.3 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, formerly known as Farm Credit West, (the "Lender"). In June 2025, we entered into a Master Loan Agreement (the “MLA”) dated June 26, 2025, 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. The MLA amends and restates the previous Master Loan Agreement between the Company and the Lender and extends the principal repayment to July 1, 2030. Additional information regarding these loans can be found in Note 11- 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 October 31, 2025, our outstanding borrowings under the Revolving Credit Supplement were $72.5 million and we had $41.6 million available to borrow.
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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, 2025, 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 received annual patronage dividends from the Lender of $0.6 million for fiscal years 2025 and 2024.
Real Estate Development Joint Venture
On April 9, 2025, we received a cash distribution of $10.0 million representing our share of a $20.0 million distribution from our joint venture, Harvest at Limoneira. As of October 31, 2025, the 50%-owned unconsolidated joint venture had $31.2 million of cash and cash equivalents on hand.
Dividends
The holders of the Series B Convertible Preferred Stock (the “Series B Stock”) and the Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) are entitled to receive cumulative cash dividends. Such preferred dividends paid totaled $0.5 million in each of the fiscal years 2025 and 2024.
Cash dividends declared in each of the fiscal years 2025 and 2024 totaled $0.30 per common share and such dividends paid totaled $5.4 million for both fiscal years 2025 and 2024.
Income Taxes
We paid income taxes of $0.7 million and $5.2 million for fiscal years 2025 and 2024, respectively.
Real Estate Development Activities and Related Capital Resources
As noted under “Transactions Affecting Liquidity and Capital Resources,” we have the ability to control a portion of our investing cash flows to the extent necessary based upon our liquidity demands. In order for our real estate development operations to reach their maximum potential benefit to us, however, we will need to be successful over time in identifying other third-party sources of capital to collaborate with us to move those development projects forward. While we are frequently in discussions with potential external sources of capital in respect to all of our development projects, current market conditions for California real estate projects make it difficult to predict the timing and amounts of future capital that will be required to complete the development of our projects.
In November 2015, we entered into a joint venture with Lewis for the residential development of our East Area I real estate development project. To consummate the transaction, we formed LLCB as the development entity, contributed our East Area I property to the joint venture and sold a 50% interest in the joint venture to Lewis. The first phase of the project broke ground to commence mass grading in November 2017. Approved project plans currently include approximately 1,750 residential units and site improvements. A total of 1,261 residential units have closed from the project’s inception to October 31, 2025.
In October 2022, we entered into another joint venture with Lewis for the development of our 17-acre East Area I Retained Property. We formed LLCB II as the development entity, contributed our Retained Property to the joint venture and sold a 50% interest to Lewis for $8.0 million. We recorded a gain on the transaction of $4.7 million, of which $0.5 million was deferred and recognized in fiscal year 2024. Approved project plans currently include approximately 300 residential units and site improvements.
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The joint venture partners will share in the capital contributions to fund project costs until loan proceeds and/or revenues are sufficient to fund the projects. Since inception, each partner has made funding contributions of $21.4 million to LLCB and $3.2 million to LLCB II. In April 2025, we received a cash distribution of $10.0 million from LLCB and we expect to receive approximately $155.0 million from LLCB, LLCB II and East Area II over the next five years of the projects.
Trend Information
The commodity pricing for our fresh produce, and therefore our revenues and margins, is significantly impacted by consumer demand. The worldwide fresh produce industry has historically enjoyed consistent underlying demand and favorable growth dynamics. In recent years, the market for fresh produce has increased faster than the rate of population growth, supported by ongoing trends including greater consumer demand for healthy, fresh and convenient foods, increased retailer square footage devoted to fresh produce, and greater emphasis on fresh produce as a differentiating factor in attracting customers. Health-conscious consumers are driving much of the growth in demand for fresh produce. Over the past several decades, the benefits of natural, preservative-free and organic foods have become an increasingly significant element of the public dialogue on health and nutrition. As a result, consumption of fresh fruits and vegetables markedly increased. Conversely, a decrease in demand, as was seen during the COVID-19 pandemic as a result of restaurant closures, had the impact of reducing our pricing and therefore our revenues and margins.
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with GAAP requires us to develop critical accounting policies and make certain estimates, assumptions and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates and judgments on historical experience, available relevant data and other information that we believe to be reasonable under the circumstances, and we continue to review and evaluate these estimates. Actual results may materially differ from these estimates under different assumptions or conditions as new or additional information becomes available in future periods. For further information on significant accounting policies, see discussion in Note 2 - Summary of Significant Accounting Policies.
Impairment of Real Estate Development Projects – We evaluate our real estate development projects, held either by us or as included specifically within our investments in LLCB and LLCB II, for impairment on an ongoing basis. Our evaluation for impairment involves an initial assessment of each real estate development project to determine whether events or changes in circumstances exist that may indicate that the carrying amounts of, or investment in, real estate development projects are no longer recoverable. Possible indications of impairment may include events or changes in circumstances affecting the entitlement process, litigation, zoning, government regulation, geographical demand for new housing or commercial property, and market conditions related to residential or commercial land lots. When events or changes in circumstances exist, we further evaluate the real estate development projects for impairment by a) comparing undiscounted future cash flows expected to be generated over the life of the real estate development projects to the respective carrying amount for our real estate development or b) determining if our equity in investment incurred an other-than-temporary decline in value.
We make significant judgments in evaluating each real estate development project, as held by us or within our investments in LLCB and LLCB II, for possible indications of impairment. These judgments may relate to the identification of appropriate and comparable market prices, the consideration of changes to legal factors or the business climate, the likelihood of successfully completing the entitlement process, changes in zoning or government regulation, and demand for new housing. Changes in these judgments could have a significant impact on real estate development or equity in investments. No impairment loss has been recognized on any real estate development and no other-than-temporary-impairment has been recognized on our equity in LLCB or LLCB II, for fiscal years 2025, 2024 and 2023.
The impairment calculation for real estate developments held by us compares the carrying value of the asset to the asset’s estimated future cash flows (undiscounted). If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on estimated future cash flows (discounted). We recognize an impairment loss equal to the amount by which the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset will be its new cost basis. Restoration of a previously recognized impairment loss is prohibited. If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to impairment losses that could be material to our results of operations.
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Whenever events or changes in circumstances indicate that the carrying amount of our equity investments in LLCB and LLCB II might not be recoverable, then we determine whether an impairment is other-than-temporary. If we conclude the impairment is other-than-temporary, we determine the estimated fair value of the investment by performing a discounted cash flow or market approach analysis and recognize an other-than-temporary impairment to reduce the investment to its estimated fair value.
We believe that the accounting estimate related to impairment of real estate development projects held by us, or other-than-temporary impairment of our equity investments in LLCB and LLCB II, is a critical accounting estimate because it is very susceptible to change from period to period; it requires management to make assumptions about future prices, production, and costs, and the potential impact of a loss from impairment could be material to our earnings. Management’s assumptions regarding future cash flows from real estate development projects or return on equity of our investments in LLCB and LLCB II have fluctuated in the past due to changes in prices, production and costs and are expected to continue to do so in the future as market conditions change.
Recent Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies for information concerning recent accounting pronouncements.