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LC

Limoneira CO (LMNR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 net revenue was $35.1M vs $44.6M in Q2 FY2024 and $34.3M in Q1 FY2025; GAAP diluted EPS was -$0.20 vs $0.35 YoY and -$0.18 in Q1; adjusted diluted EPS was -$0.17 vs $0.44 YoY .
  • Versus S&P Global consensus, revenue missed ($35.1M vs $38.7M*), EPS missed (GAAP -$0.20 vs -$0.03*; adjusted -$0.17 vs -$0.03*), and adjusted EBITDA missed (-$0.17M vs $2.51M*) .
  • Management lowered FY2025 fresh lemon volume guidance to 4.5–5.0M cartons (from 5.0–5.5M) and reiterated avocado 7.0–8.0M lbs; Q2 benefited from robust avocado pricing with the majority of harvest expected in Q3 .
  • Strategic catalyst: announced merger of citrus sales and marketing into Sunkist Growers beginning Q1 FY2026, targeting ~$5M annual selling/marketing cost savings and ~$5M annual EBITDA improvement; brokered fruit revenue will transition to Sunkist while packing margins per carton are expected to strengthen .
  • Liquidity boosted by $10M cash distribution from Harvest JV in April; dividend declared $0.075 per share payable July 18, 2025 .

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Avocado pricing strength: “Our avocado operations benefited from robust pricing that continued throughout the quarter, and we expect strong results in the third quarter when the majority of our harvest occurs.”
  • Operating efficiency: Operating loss improved to -$3.3M from -$4.7M YoY; total costs and expenses fell to $38.5M from $49.3M YoY, reflecting cost discipline .
  • Strategic partnership: Announced citrus sales/marketing merger with Sunkist starting FY2026, expected to drive ~$5M annual cost savings and EBITDA uplift. “We expect this to quickly improve the efficiency of our supply chain, significantly reduce costs…” .

What Went Wrong

  • Lemon market pressure: Fresh packed lemon revenue fell to $19.7M from $25.8M; cartons sold were 1.357M at $14.52 per carton vs 1.446M at $17.85 YoY, reflecting oversupply and price pressure .
  • Farm management revenue decline: Dropped to $0.339M from $2.0M due to termination of PGIM farm management agreement effective March 31, 2025 .
  • Earnings swung to loss: Net loss applicable to common stock was -$3.5M vs +$6.4M YoY, driven by absence of prior-year JV equity gains (Q2 FY2024 had $16.5M total other income) .

Financial Results

Headline financials (trend: Q4 FY2024 → Q1 FY2025 → Q2 FY2025)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$43.861 $34.305 $35.119
GAAP Diluted EPS ($)-$0.11 -$0.18 -$0.20
Adjusted Diluted EPS ($)-$0.09 -$0.14 -$0.17
Operating Income (Loss) ($USD Millions)-$2.751 -$5.346 -$3.345
Adjusted EBITDA ($USD Millions)$1.200 -$2.294 -$0.167

Q2 YoY comparison (Q2 FY2024 → Q2 FY2025)

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$44.606 $35.119
GAAP Diluted EPS ($)$0.35 -$0.20
Adjusted Diluted EPS ($)$0.44 -$0.17
Operating Income (Loss) ($USD Millions)-$4.675 -$3.345
Total Costs and Expenses ($USD Millions)$49.281 $38.464
Adjusted EBITDA ($USD Millions)$16.560 -$0.167

Actual vs S&P Global consensus – Q2 FY2025

MetricConsensus*Actual
Revenue ($USD Millions)$38.700*$35.119
Primary EPS ($)-$0.03*GAAP: -$0.20 ; Adjusted: -$0.17
EBITDA Consensus Mean ($USD Millions)$2.505*EBITDA: -$0.736 ; Adjusted EBITDA: -$0.167

Values marked with * retrieved from S&P Global.

Segment breakdown – Q2 FY2025 vs Q2 FY2024

SegmentRevenue Q2 2024 ($000)Revenue Q2 2025 ($000)Operating Income Q2 2024 ($000)Operating Income Q2 2025 ($000)
Fresh Lemons30,841 22,652 1,972 373
Lemon Packing15,878 13,848 2,290 1,722
Avocados2,348 2,780 923 1,157
Other Agribusiness5,104 3,498 -576 492
Total Agribusiness43,257 33,582 2,821 1,878

KPIs (volume and pricing) – trend

KPIQ4 2024Q1 2025Q2 2025
Fresh lemon cartons sold (US packed, ‘000)470 1,147 1,357
Avg lemon price per carton ($)$17.95 $18.44 $14.52
Avocado pounds sold (‘000)4,622 73 1,232
Avg avocado price per lb ($)$1.92 $2.25 $2.26
Orange cartons sold (‘000)91 75 92
Avg orange price per carton ($)$18.99 $20.91 $17.07
Farm management revenue ($000)2,916 1,181 339

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Fresh lemon volume (cartons)FY20255.0–5.5M 4.5–5.0M Lowered
Avocado volume (lbs)FY20257.0–8.0M 7.0–8.0M Maintained
Harvest JV distributions ($M)FY2025$8 $10 (actual received Apr-2025) Raised/Actualized
Lemon cartons (indicative)FY2026—4.0–4.5M (early estimate) New early outlook
Sunkist merger savingsFY2026 onward—~$5M annual selling/marketing cost savings; ~$5M EBITDA improvement New
Dividend per common shareQ3 CY2025—$0.075 payable Jul 18, 2025 Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Lemon market supply/pricingAchieved FY2024 pricing improvement; noted market pressures ahead Oversupply created pricing pressure; expect seasonal improvement in 2H Deteriorated then stabilizing
Sunkist merger and cost structureStrategic alternatives in progress ; asset-lighter model focus Announced merger into Sunkist (Q1 FY2026 start), ~$5M annual savings/EBITDA uplift; brokered fruit revenue to transition Structurally positive from FY2026
Avocado expansion and pricingPlan to expand 1,000 acres by FY2027; strong pricing; potential tariff tailwinds Robust pricing in Q2; delayed harvest to Q3 for size/price; early plantings ahead of schedule Positive
Water monetization$1.7M water rights sale; more transactions likely On track to close two additional transactions in FY2025 Positive
Real estate JV cash flows$15M received in FY2024; $165–$180M over 6–7 years $10M received April 2025; $180M expected over 7 years with schedule updated Positive visibility
Tariffs/macroPotential avocado import tariffs could aid domestic pricing Not reiterated; focus shifted to Sunkist and operations Neutral

Management Commentary

  • Strategic rationale: “We’re merging our citrus sales and marketing operations with Sunkist Growers… We expect this to quickly improve the efficiency of our supply chain, significantly reduce costs…” .
  • Cost structure clarity: “Sunkist offers their marketing and sales services at a fixed fee… packing margins… will be strengthened because of the more streamlined infrastructure and the elimination of the Oxnard lease.” .
  • Avocado outlook: “We expect strong results in the third quarter when the majority of our harvest occurs.” .
  • Portfolio execution: “We remain on track to close two additional water monetization transactions this fiscal year.” .
  • Real estate momentum: “We received $10 million of our share of a $20 million cash distribution from our… joint venture… as of April 30, 2025, totaled $37.3 million.” .

Q&A Highlights

  • Brokered fruit revenue will shift to Sunkist, reducing Limoneira’s top-line, while third-party cartons continue through Limoneira’s facility; AR/credit will move to Sunkist, with Limoneira retaining inventory and sales position .
  • Economics under Sunkist: fixed-fee marketing structure reduces selling costs; elimination of expensive Oxnard wash/storage lease improves margins; packing margins expected to strengthen .
  • Avocado harvest strategy: intentional delay into Q3 to maximize size/weight and pricing; favorable weather supports quality .
  • Early plantings ahead of plan: ~10,000 lbs/acre achieved on a three-year-old block vs 17,000 target, running 1–1.5 years ahead of expectations; supports confidence in expanding to 2,000 acres and $50M EBITDA by 2030 .
  • Tax rate: year-to-date estimated tax rate decreased; expected to normalize by FY2025 year-end as discrete transactions complete .

Estimates Context

  • Q2 FY2025: Consensus revenue $38.7M*, actual $35.1M (miss); consensus Primary EPS -$0.03*, GAAP diluted EPS -$0.20 and adjusted diluted EPS -$0.17 (miss); consensus EBITDA $2.51M*, actual adjusted EBITDA -$0.17M (miss) .
  • Near-term expectations likely to adjust lower for FY2025 lemon revenues given volume guidance reduction to 4.5–5.0M cartons, while FY2026 margin/EPS estimates may improve on ~$5M annual cost savings and packing margin enhancements from Sunkist .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Q2 print was pressured by lemon oversupply and pricing, leading to revenue/EPS/EBITDA misses vs consensus; sequential revenue was modestly up from Q1, but margins remained challenged .
  • FY2025 lemon volume guidance was cut; watch for pricing relief in 2H and a stronger Q3 driven by delayed avocado harvest and robust pricing .
  • Sunkist merger is a structural margin story starting FY2026: ~$5M annual selling/marketing cost savings and EBITDA improvement with stronger packing margins and fixed-fee marketing economics; brokered fruit revenue will move off Limoneira’s top line, altering revenue mix .
  • Real estate JV cash flows provide tangible liquidity/cash return ($10M received in April; multi-year distribution schedule to ~$180M total), partially de-risking the agricultural cycle .
  • Water monetization remains an incremental cash/income lever with two additional transactions targeted in FY2025 .
  • For positioning: near-term trading likely tied to lemon pricing/supply normalization and Q3 avocado execution; medium-term thesis shifts toward structurally improved citrus margins under Sunkist plus avocado acreage expansion and recurring real estate distributions .
  • Dividend continuity ($0.075) underscores commitment to shareholder returns amid transition; monitor leverage (LT debt $54.9M; net debt ~$52.9M) and JV cash balances as buffers .