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    Eric Larson

    Research Analyst at Seaport Research

    Eric Larson's questions to CALAVO GROWERS (CVGW) leadership

    Eric Larson's questions to CALAVO GROWERS (CVGW) leadership • Q1 2023

    Question

    Eric Larson from Seaport Research asked about the impact of smaller-sized Mexican avocados on pricing and margins. He also questioned why Prepared segment margins weren't stronger given the significant drop in avocado input costs, and inquired about consumer purchasing behavior and competitive dynamics for avocados amid sticky retail prices.

    Answer

    President and CEO Brian Kocher confirmed that a higher volume of smaller fruit negatively impacted the product mix and margins. CFO Shawn Munsell clarified that while the guacamole division's gross margin improved to 26% due to lower fruit costs, it represents only about one-fifth of the total Prepared segment. Kocher added that while avocado category volumes were up, retailers have been slow to increase promotions and shelf space after reducing them during last year's high-price environment, but conditions improved in February with Calavo's volumes up 9%.

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    Eric Larson's questions to CALAVO GROWERS (CVGW) leadership • Q4 2022

    Question

    Eric Larson of Seaport Research Partners asked if the excess supply of Peruvian avocados would become a recurring annual issue. He also questioned the long-term growth potential of the U.S. avocado market, referencing a prior 4 billion pound estimate, and sought details on the new partnership with General Mills for Old El Paso branded products.

    Answer

    President and CEO Brian Kocher explained that Calavo is preparing for Peruvian supply to be a regular market factor by diversifying its sourcing from Peru, Colombia, and Jalisco, Mexico. He noted Calavo's marketer model provides flexibility to manage inventory and pricing in a growing supply environment. Kocher estimated the current U.S. market is around 3 billion pounds with room for growth, but highlighted that international markets are growing faster. Regarding the partnership, he confirmed it is a new, exclusive licensing agreement for Calavo to manufacture Old El Paso fresh guacamole and salsas, leveraging a trusted brand to expand its retail presence.

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    Eric Larson's questions to CALAVO GROWERS (CVGW) leadership • Q2 2022

    Question

    Eric Larson from Seaport Research inquired about the Fresh segment's avocado margins for the quarter, asking if they fell within the historical $3 to $4 per case range. He also asked for a timeline on when elevated avocado prices might normalize and questioned the progress on pricing actions and margin recovery in the RFG segment.

    Answer

    President and CEO Brian Kocher explained that Q2 Fresh margins were significantly higher than the historical range due to unique market conditions of high demand and constrained supply, which offset a 13% volume decline. He anticipates a normalization back to the historical range as the summer crop arrives in mid-July. For the RFG segment, Kocher noted that improvement is gradual but occurring across the P&L, citing a 6% year-over-year price increase, a 9% sequential gain in labor productivity, and effective cost management, leading to a positive 2% gross margin from negative 1% in Q1.

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