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What changed in Limoneira CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Limoneira CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+270 added−294 removedSource: 10-K (2023-12-21) vs 10-K (2022-12-22)

Top changes in Limoneira CO's 2023 10-K

270 paragraphs added · 294 removed · 216 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

68 edited+18 added−36 removed37 unchanged
Biggest changeThe following is a description of our agriculture properties: Ranch Name County / State or Country Total Acres Lemons Avocados Oranges Specialty Crops Other Limoneira/Olivelands Ventura, CA 1,700 600 500 — — 600 La Campana Ventura, CA 300 — 300 — — — Teague McKevett Ventura, CA 500 — — — — 500 Orchard Farm Ventura, CA 1,100 700 — — — 400 Rancho La Cuesta Ventura, CA 200 100 — — — 100 Limco Del Mar Ventura, CA 200 100 100 — — — Porterville Ranches Tulare, CA 1,200 300 — 300 300 300 Ducor Ranches Tulare, CA 1,000 300 — 300 300 100 Sheldon Ranches Tulare, CA 700 100 — 300 100 200 Lemons 400 Tulare, CA 800 400 — — — 400 Windfall Farms San Luis Obispo, CA 700 — — — 300 400 Cadiz San Bernardino, CA 800 600 — — — 200 Associated Citrus Packers Yuma, AZ 1,300 700 — — — 600 Pan de Azucar & San Pablo La Serena, Chile 3,500 500 — 100 — 2,900 Santa Clara Jujuy, Argentina 1,200 1,000 — — — 200 Other agribusiness land Various Counties, CA 200 200 — — — — Total 15,400 5,600 900 1,000 1,000 6,900 Percentage of Total 100 % 36 % 6 % 7 % 7 % 44 % 9 The Limoneira/Olivelands Ranch is the original site of our Company.
Biggest changeThe following is a description of our agriculture properties: Ranch Name County / State or Country Total Acres Lemons Avocados Oranges Wine Grapes Other Limoneira/Olivelands Ventura, CA 1,700 500 700 — — 500 La Campana Ventura, CA 300 — 300 — — — Orchard Farm Ventura, CA 1,100 500 — — — 600 Rancho La Cuesta Ventura, CA 200 100 — — — 100 Limco Del Mar Ventura, CA 200 100 100 — — — Windfall Farms San Luis Obispo, CA 700 — — — 400 300 Associated Citrus Packers Yuma, AZ 1,300 600 — — — 700 Pan de Azucar & San Pablo La Serena, Chile 3,500 500 — 100 — 2,900 Santa Clara Jujuy, Argentina 1,200 1,000 — — — 200 Other agribusiness land Various Counties, CA 400 200 100 — — 100 Total 10,600 3,500 1,200 100 400 5,400 Percentage of Total 100 % 33 % 11 % 1 % 4 % 51 % The Limoneira/Olivelands Ranch is the original site of our Company.
We also partner with one of our tenants and have an organic recycling facility on our land in Ventura County. Effective November 1, 2021, we also lease our 1,200 acre Santa Clara ranch in Argentina. Real Estate Development Summary We invest in real estate development projects and recognize that long-term strategies are required for successful real estate development activities.
We also partner with one of our tenants and have an organic recycling facility on our land in Ventura County. Effective November 1, 2021, we also lease our 1,200-acre Santa Clara ranch in Argentina. Real Estate Development Summary We invest in real estate investment projects and recognize that long-term strategies are required for successful real estate development activities.
Increases in lemons procured from third-party growers and suppliers and international sources improve our ability to provide our customers with fresh lemons throughout the year. • Increase the Volume of our Lemon Packing Operations . We regularly monitor our costs for redundancies and opportunities for cost reductions. In this regard, cost per carton is a function of throughput.
Increases in lemons procured from third-party growers and suppliers and international sources improve our ability to provide our customers with fresh lemons throughout the year. 13 • Increase the Volume of our Lemon Packing Operations . We regularly monitor our costs for redundancies and opportunities for cost reductions. In this regard, cost per carton is a function of throughput.
For real estate development projects and joint ventures, it is not unusual for the timing and amounts of revenues and costs, partner contributions and distributions, project loans, other financing assumptions and project cash flows to be 10 impacted by government approvals, project revenue and cost estimates and assumptions, economic conditions, financing sources and product demand as well as other factors.
For real estate development projects and joint ventures, it is not unusual for the timing and amounts of revenues and costs, partner contributions and distributions, project loans, other financing assumptions and project cash flows to be impacted by government approvals, project revenue and cost estimates and assumptions, economic conditions, financing sources and product demand as well as other factors.
Competition in the various agribusiness markets is affected by reliability of supply, product quality, brand recognition and perception, price and the ability to satisfy changing customer preferences through innovative product offerings. The sale and leasing of residential, commercial and industrial real estate is very competitive, with competition coming from numerous and varied sources throughout California.
Competition in the various agribusiness markets is affected by reliability of supply, product quality, brand recognition and perception, price and the ability to satisfy changing customer preferences through innovative product offerings. 14 The sale and leasing of residential, commercial and industrial real estate is very competitive, with competition coming from numerous and varied sources throughout California.
Finally, over time, we expect that our customers and the end consumers of our fruit will value the investments that we have made in renewable energy as a part of our farming and packing operations, which we believe may help us differentiate our products from similar commodities. • We have made various other investments in water rights and mutual water companies.
Finally, over time, we expect that our customers and the end consumers of our fruit will value the investments that we have made in renewable energy as a part of our packing operations, which we believe may help us differentiate our products from similar commodities. • We have made various other investments in water rights and mutual water companies.
The duration of these trends and the magnitude of such impacts cannot be estimated at this time, as they are influenced by a number of factors, many of which are outside management’s control, including, but not limited, to those presented in Item 1A. Risk Factors of this Annual 6 Report.
The duration of these trends and the magnitude of such impacts cannot be estimated at this time, as they are influenced by a number of factors, many of which are outside management’s control, including, but not limited, to those presented in Item 1A. Risk Factors of this Annual Report.
Peak lemon production occurs at different times of the year depending on geographic region. In addition to our lemon production in California and Arizona and lemons we acquire from domestic 13 third-party growers and suppliers, we have expanded our lemon supply sources to international markets such as Mexico, Chile and Argentina.
Peak lemon production occurs at different times of the year depending on geographic region. In addition to our lemon production in California and Arizona and lemons we acquire from domestic third-party growers and suppliers, we have expanded our lemon supply sources to international markets such as Mexico, Chile and Argentina.
In the purest sense, our largest competitors in our agribusiness segments are other citrus and avocado producers in California, Mexico, Chile, Argentina and Florida, a number of which are members of cooperatives such as Sunkist or have selling relationships with third-party 14 packinghouses similar to that of Limoneira.
In the purest sense, our largest competitors in our agribusiness segments are other citrus and avocado producers in California, Mexico, Chile, Argentina and Florida, a number of which are members of cooperatives such as Sunkist or have selling relationships with third-party packinghouses similar to that of Limoneira.
Limoneira has an Illness and Injury Prevention Plan (IIPP), a Safety Guide and conforms to and follows regulations and guidelines set forth by OSHA in all facilities and operations. Where a particular jurisdiction's guidelines, such as Cal OHSA, are different from the OSHA standard, Limoneira adheres to the most extensive guidelines.
Limoneira has an Illness and Injury Prevention Plan (IIPP), a Safety Guide and conforms to and follows regulations and guidelines set forth by OSHA in all facilities and operations. Where a particular jurisdiction's guidelines, such as Cal/OSHA, are different from the OSHA standard, Limoneira adheres to the most extensive guidelines.
Markets and Competitive Strengths Agribusiness Operations With agricultural operations dating back to 1893, we are one of California’s oldest citrus growers and one of the largest growers of lemons and avocados in the United States. Consequently, we have developed significant experience with a variety of crops, mainly lemons, avocados and oranges.
Markets and Competitive Strengths Agribusiness Operations With agricultural operations dating back to 1893, we are one of California’s oldest citrus growers and one of the largest growers of lemons and avocados in the United States. Consequently, we have developed significant experience with a variety of crops, mainly lemons and avocados.
Agribusiness activities are performed through these four reporting segments: We are one of California’s oldest citrus growers. According to Sunkist Growers, Inc. (“Sunkist”), we are one of the largest growers of lemons in the United States and, according to the California Avocado Commission, one of the largest growers of avocados in the United States.
Agribusiness activities are performed through these four reporting segments: We are one of California’s oldest citrus growers. According to Sunkist Growers, Inc., we are one of the largest growers of lemons in the United States and, according to the California Avocado Commission, one of the largest growers of avocados in the United States.
Business Strategy We are an agribusiness and real estate development company that generates revenue and annual cash flows to support investments in agricultural efficiencies and acquisitions and real estate development activities.
Business Strategy We are an agribusiness and real estate development company that generates revenue and annual cash flows to support investments in agricultural efficiencies and real estate development activities.
We intend to strategically sell certain assets to reduce existing debt, fund acquisitions, increase farming efficiencies and expand packing capabilities. Increased volume of fruit sales is expected to be fueled by sourcing from third-party growers and suppliers, thus mitigating the volatility that commodity pricing has on growers. • Expand our Sources of Lemon Supply.
We intend to strategically sell certain assets to reduce existing debt, increase farming efficiencies and expand packing capabilities. Increased volume of fruit sales is expected to be fueled by sourcing from third-party growers and suppliers, thus mitigating the volatility that commodity pricing has on growers. • Expand our Sources of Lemon Supply.
We pack and sell lemons grown by us as well as lemons grown by others, the operations of which are included in our financial statements under the lemon packing segment. Lemons delivered to our packinghouse in Santa Paula, California and Yuma, Arizona are sized, graded, cooled, ripened and packed for delivery to customers.
We pack and sell lemons grown by us as well as lemons grown by others, the operations of which are included in our financial statements under the lemon packing segment. Lemons delivered to our packinghouses in Santa Paula, California and Yuma, Arizona are sized, graded, cooled, ripened and packed for delivery to customers.
Of most importance is the overall fresh utilization rate for our fruit, which is directly related to quality. • Expand International Sales and Marketing of Lemons . We estimate that we currently have approximately 10% of the fresh lemon market in the United States and a larger share of the United States lemon export market.
Of most importance is the overall fresh utilization rate for our fruit, which is directly related to quality. • Expand International Sales and Marketing of Lemons . We estimate that we currently have approximately 15% of the fresh lemon market in the United States and a larger share of the United States lemon export market.
Such factors could affect our results of operations, cash flows and liquidity. For more than 100 years, we have been making strategic real estate investments in California agricultural and developable real estate. Our current real estate developments include developable land parcels, multi-family housing and single-family homes with approximately 900 units in various stages of planning and development.
Such factors could affect our results of operations, cash flows and liquidity. 10 For more than 100 years, we have been making strategic real estate investments in California agricultural and developable real estate. Our current real estate developments include developable land parcels, multi-family housing and single-family homes with approximately 800 units in various stages of planning and development.
Business Division Summary 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 includes oranges, specialty citrus and other crops. The agribusiness division includes our core operations of farming, harvesting, lemon packing and citrus sales operations.
Business Division Summary 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 includes oranges, specialty citrus, other crops and farm management services. The agribusiness division includes our core operations of farming, harvesting, lemon packing and lemon sales operations.
Agribusiness With respect to our agribusiness operations, key elements of our strategy are: • Expand our One World of Citrus Asset Light Business Model in three main channels: ◦ Growing, packing, marketing and distributing fruit grown on our properties; ◦ Utilizing third-party fruit by packing, marketing and distributing their fruit through Limoneira channels; and ◦ Marketing and distributing brokered fruit.
Agribusiness With respect to our agribusiness operations, key elements of our strategy are: • Expand our One World of Citrus Asset Lighter Business Model in three main channels: ◦ Growing, packing, marketing and distributing fruit grown on our properties; ◦ Utilizing third-party grower fruit by packing, marketing and distributing their fruit through Limoneira channels; and ◦ Marketing and distributing brokered fruit.
Overview We are primarily an agribusiness company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 15,400 acres of land, water resources and other assets to maximize long-term stockholder value. Our current operations consist of fruit production, sales and marketing, rental operations, real estate and capital investment activities.
Overview We are primarily an agribusiness company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 11,100 acres of land, water resources and other assets to maximize long-term stockholder value. Our current operations consist of fruit production, sales and marketing, rental operations, real estate and capital investment activities.
The ongoing impact of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for fiscal year 2023 and beyond cannot be fully estimated at this point. The following discussions are subject to the future effects of the COVID-19 pandemic on our ongoing business operations.
The ongoing impact of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for fiscal year 2024 and beyond cannot be estimated at this point. The following discussions are subject to the future effects of the COVID-19 pandemic on our ongoing business operations.
The joint venture partners will share in 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.
The joint venture partners will share in 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 $0.5 million to LLCB II.
We own shares in the following mutual water companies: Farmers Irrigation Co., Canyon Irrigation Co., San Cayetano Mutual Water Co., Middle Road Mutual Water Co. and Pioneer Water Company, Inc. Additionally, we acquired water rights in the adjudicated Santa Paula Basin (aquifer), the YMIDD and in Chile.
We own shares in the following mutual water companies: Farmers Irrigation Co., Canyon Irrigation Co., San Cayetano Mutual Water Co. and Middle Road Mutual Water Co. Additionally, we acquired water rights in the adjudicated Santa Paula Basin (aquifer), the YMIDD and in Chile.
As our agricultural and non-strategic real estate development investments are monetized, we intend to use the cash flow to reduce existing debt, fund acquisitions, invest in farming efficiencies and expand packing capacities through our One World of Citrus Asset Light Business Model.
As our agricultural and non-strategic real estate development investments are monetized, we intend to use the cash flow to reduce existing debt, invest in farming efficiencies and expand packing capacities through our One World of Citrus Asset Lighter Business Model.
Our agricultural properties in Tulare County, which is in the San Joaquin Valley in Central California, and in Yuma, Arizona, are also located in areas that are well-suited for growing citrus crops. • Historically, a higher percentage of our crops goes to the fresh market, which is commonly referred to as fresh utilization, than that of other growers and packers with which we compete. • We have contiguous and nearby land resources that permit us to efficiently use our agricultural land and resources. • In all but one of our properties, we are not dependent on State or Federal water projects to support our agribusiness or real estate development operations. • We own approximately 94% of our agricultural land and take a long view on our fruit production practices. • A significant amount of our agribusiness property was acquired many years ago, which results in a low-cost basis and associated expenses. • In our fresh lemons and lemon packing segments, our integrated business model with respect to growing, packing, marketing and selling citrus allows us to better serve our customers. 12 • Our lemon packing operations provide marketing opportunities with other citrus companies and their respective products. • We have made investments in ground-based solar projects that provide us with tangible and intangible non-revenue generating benefits.
Our agricultural properties in Yuma, Arizona, are also located in an area that is well-suited for growing citrus crops. • Historically, a higher percentage of our crops goes to the fresh market, which is commonly referred to as fresh utilization, than that of other growers and packers with which we compete. • We have contiguous and nearby land resources that permit us to efficiently use our agricultural land and resources. • In all but one of our properties, we are not dependent on State or Federal water projects to support our agribusiness or real estate development operations. • We own a majority of our agricultural land and take a long view on our fruit production practices. • A significant amount of our agribusiness property was acquired many years ago, which results in a low-cost basis and associated expenses. • In our fresh lemons and lemon packing segments, our integrated business model with respect to growing, packing, marketing and selling citrus allows us to better serve our customers. • Our lemon packing operations provide marketing opportunities with other citrus companies and their respective products. 12 • We have made investments in ground-based solar projects that provide us with tangible and intangible non-revenue generating benefits.
These remedies can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition. For a discussion of the various risks we face from regulation and compliance matters, see Item 1A.
These remedies can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition. For a discussion of the various risks we face from regulation and compliance matters, see Item 1A. Risk Factors of this Annual Report.
(“PDA”), a lemon and orange orchard and a 100% interest in Agricola San Pablo SpA. ("San Pablo"), a lemon and orange orchard, all of which are located near La Serena, Chile. We have a 51% interest in a joint venture, Trapani Fresh Consorcio de Cooperacion ("Trapani Fresh"), a lemon orchard in Argentina.
(“PDA”), a lemon and orange orchard and a 100% interest in Agricola San Pablo, SpA (“San Pablo”), a lemon and orange orchard, all of which are located near La Serena, Chile. We have a 51% interest in a joint venture, Trapani Fresh Consorcio de Cooperacion (“Trapani Fresh”), a lemon orchard in Argentina.
As of October 31, 2022, we lease approximately 500 acres of our land to third-party agricultural tenants who grow a variety of row crops. Our leased land business provides us with a profitable method to diversify the use of our land.
As of October 31, 2023, we lease approximately 400 acres of our land to third-party agricultural tenants who grow a variety of row crops. Our leased land business provides us with a profitable method to diversify the use of our land.
Given the economic uncertainty as a result of the COVID-19 pandemic over the past three years, we have taken actions to improve our current liquidity position, including temporarily postponing capital expenditures, selling equity securities to increase cash, reducing operating costs, substantially reducing discretionary spending and strategically selling certain assets.
Given the economic uncertainty as a result of the COVID-19 pandemic over the past four fiscal years, we have taken actions to improve our current liquidity position, including strategically selling certain assets, temporarily postponing capital expenditures and substantially reducing discretionary spending.
The following table presents the number of acres planted by fruit variety and approximate age of our orchards: Age of Orchards 0-5 Years 6-25 Years Over 25 Years Total Lemons 1,000 3,500 1,100 5,600 Avocados 100 300 500 900 Oranges — 500 500 1,000 Specialty citrus and other — 900 100 1,000 Total 1,100 5,200 2,200 8,500 Lemon Packing and Sales We are one of the oldest continuous lemon packing operations in North America.
The following table presents the number of acres planted by fruit variety and approximate age of our orchards: Age of Orchards 0-5 Years 6-25 Years Over 25 Years Total Lemons 300 2,400 800 3,500 Avocados 400 300 500 1,200 Oranges — 100 — 100 Wine grapes 100 300 — 400 Total 800 3,100 1,300 5,200 Lemon Packing and Sales We are one of the oldest continuous lemon packing operations in North America.
For our specific crops, the size of the U.S. market is approximately $661 million for lemons, both fresh and juice, approximately $340 million for avocados, and approximately $1.6 billion for oranges, both fresh and juice.
For our specific crops, the size of the U.S. market is approximately $586 million for lemons, both fresh and juice, approximately $500 million for avocados, and approximately $1.5 billion for oranges, both fresh and juice.
We own and maintain 257 residential housing units located mainly in Ventura and Tulare Counties in California that we lease to employees, former employees and non-employees. We also own several commercial office buildings. These properties generate reliable cash flows that we use to partially fund the operating cost's of our business.
We own and maintain 238 residential housing units located in Ventura County in California that we lease to employees, former employees and outside tenants. We also own several commercial office buildings. These properties generate reliable cash flows that we use to partially fund the operating costs of our business.
The other agribusiness land in the table above includes corporate and lemon packing facilities, land leased to other agricultural businesses, rental units, roads, creeks, hillsides and other open land. Our orchards can maintain production for many years.
Our headquarters, lemon packing operations and storage facilities are located on this property. Other acres in the table above includes corporate and lemon packing facilities, land leased to other agricultural businesses, rental units, roads, creeks, hillsides and other open land. 9 Our orchards can maintain production for many years.
Customers We market and sell our lemons directly to our food service, wholesale and retail customers in the United States, Canada, Asia, Australia, Europe and certain other international markets. We sold lemons to approximately 200 U.S. and international customers during fiscal year 2022.
Customers We market and sell our lemons directly to our food service, wholesale and retail customers in the United States, Canada, Asia, Australia, Europe and certain other international markets. We sold lemons to approximately 190 U.S. and international customers during fiscal year 2023. We sell our avocados and oranges to third-party packinghouses and our wine grapes to wine producers.
In February 2022, the Company terminated its Avocado Marketing Agreement and the associated Letter Agreement Regarding Fruit Commitment with Calavo to pursue opportunities with other packing and marketing companies. Primarily due to differing soil conditions, the care of avocado trees is intensive.
(“Calavo”), a packing and marketing company listed on the NASDAQ Global Select Market under the symbol CVGW. In February 2022, the Company terminated its Avocado Marketing Agreement and the associated Letter Agreement Regarding Fruit Commitment with Calavo to pursue opportunities with other packing and marketing companies. 8 Primarily related to differing soil conditions, the care of avocado trees is intensive.
Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers).
Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers). We also use surface water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District (“YMIDD”).
California-grown avocados have peak production periods occurring between February and July. Other avocado varieties have a more limited picking season and typically command a lower price. Because of superior eating quality, the Hass avocado has contributed greatly to the avocado’s growing popularity through its retail, restaurant and other food service uses.
California-grown avocados have peak production periods occurring between February and July. Because of superior eating quality, the Hass avocado has contributed greatly to the avocado’s growing popularity through its retail, restaurant and other food service uses. Approximately 95% of our avocado plantings are of the Hass variety.
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 for $20.0 million.
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 for $20.0 million. The first phase of the project broke ground to commence mass grading in November 2017.
We also seek to support the welfare of the people who produce, process and harvest the products we sell. We have established several new diversity, inclusion and belonging efforts and programs to better ensure that we are supporting our employees. Limoneira’s overall culture emphasizes the health and safety of our employees and the customers we serve.
We have several diversity, inclusion and belonging efforts and programs to better ensure that we are supporting our employees. Limoneira’s overall culture emphasizes the health and safety of our employees and the customers we serve.
Risk Factors of this Annual Report. 15 Human Capital Resources At October 31, 2022, we had 265 employees, of which 95 were salaried and 170 were hourly. None of our employees are subject to a collective bargaining agreement. We believe that our relations with our employees are good.
Human Capital Resources As of October 31, 2023, we had 257 employees, of which 100 were salaried and 157 were hourly. None of our employees are subject to a collective bargaining agreement. We believe that our relations with our employees are good.
Customers are typically large retail chains, food service companies, industrial manufacturers and distributors who sell and deliver to smaller customers in local markets throughout the world.
Fruit is also sold to independent packers, both public and private, who then sell to their own customer base. Customers are typically large retail chains, food service companies, industrial manufacturers and distributors who sell and deliver to smaller customers in local markets throughout the world.
We have agricultural plantings throughout Ventura, Tulare, San Luis Obispo and San Bernardino Counties in California, Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 5,600 acres of lemons, 900 acres of avocados, 1,000 acres of oranges and 1,000 acres of specialty citrus and other crops.
In addition to growing lemons and avocados, we grow oranges and other crops. We have agricultural plantings throughout Ventura and San Luis Obispo in California and Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 3,500 acres of lemons, 1,200 acres of avocados, 100 acres of oranges and 400 acres of wine grapes.
Our design associates and we are in the process of formulating plans for East Area II, a parcel of approximately 30 acres adjacent to East Area I.
We expect to receive approximately $123.0 million from LLCB, LLCB II and East Area II over the next seven years of the projects. 11 East Area II - Santa Paula, California. Our design associates and we are in the process of formulating plans for East Area II, a parcel of approximately 30 acres adjacent to East Area I.
We believe that an environment of diversity, inclusion and belonging fosters innovation, strengthens our global workforce, and drives our ability to serve customers. Our global presence is strengthened by having a workforce that reflects the diversity of the customers we serve and by maintaining an environment in which such diversity contributes to our mission.
We believe that an environment of diversity, inclusion and belonging fosters innovation, strengthens our global workforce, and drives our ability to serve customers.
In fiscal year 2020, we entered into an agreement to sell our Sevilla property for $2.7 million, which closed in the first quarter of fiscal year 2023.
Completion of the transaction is subject to the execution of a purchase and sale agreement and resolution of certain contingencies. Santa Maria - Santa Barbara County, California. In fiscal year 2020, we entered into an agreement to sell our Sevilla property for $2.7 million, which closed in the first quarter of fiscal year 2023.
Our plantings of avocados have been profitable and have been pursued to diversify our product line. Agricultural land that we believe is not suitable for lemons is typically planted with avocados, oranges, specialty citrus or other crops.
Our plantings of avocados have been profitable and have been pursued to diversify our product line. Agricultural land that we believe is not suitable for lemons is typically planted with avocados or other crops. While we expand our avocado plantings, we expect to do so on an opportunistic basis in locations that we believe offer a record of historical profitability.
We use ground water from the San Joaquin Valley Basin and water from local water and irrigation districts in Tulare County, which is in California’s San Joaquin Valley.
We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in Chile and our Trapani Fresh farming operations in Argentina. We use ground water from the San Joaquin Valley Basin and water from local water and irrigation districts in Tulare County, which is in California’s San Joaquin Valley.
The decline in demand for our products beginning the second quarter of fiscal year 2020, which we believe was due to the COVID-19 pandemic, negatively impacted our sales and profitability for the last three quarters of fiscal year 2020 and all of fiscal years 2021 and 2022. The COVID-19 pandemic may impact our sales and profitability in future periods.
The export market for fresh produce also significantly declined due to the COVID-19 pandemic impacts. 6 The decline in demand for our products beginning the second quarter of fiscal year 2020 has negatively impacted our sales and profitability for the last four fiscal years. The COVID-19 pandemic may continue to impact our sales and profitability in future periods.
The harvest and sale of our lemons, avocados, oranges and specialty citrus and other crops occurs in all quarters, but is generally more concentrated during our third quarter.
The harvest and sale of our lemons, avocados, oranges and other crops occurs in all quarters, but is generally more concentrated during our third quarter. Our lemons are generally grown and marketed throughout the year, our avocados are primarily sold from January through August and our wine grapes are primarily sold in September and October.
Approximately 8 95% of our avocado plantings are of the Hass variety. The storage life of fresh avocados generally ranges from one to four weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain.
The storage life of fresh avocados generally ranges from one to four weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain. Through fiscal year 2021, the Company sold the majority of its avocado production to Calavo Growers, Inc.
In particular, the United States lemon market saw a significant decline in volume, with lemon demand falling since widespread shelter in place orders were issued in March 2020, resulting in a significant market oversupply. The export market for fresh produce also significantly declined due to the COVID-19 pandemic impacts.
COVID-19 Pandemic The COVID-19 pandemic has had an adverse impact on the industries and markets in which we conduct business. In particular, the United States lemon market saw a significant decline in volume, with lemon demand falling since widespread shelter in place orders were issued in March 2020, resulting in a significant market oversupply.
In October 2022, we entered into another joint venture with Lewis for the development of our 17-acre East Area I Retained Property (“Retained Property”), which is located within the East Area I property.
Approved project plans include approximately 1,500 residential units and site improvements. A total of 707 residential units have closed from the project's inception to October 31, 2023. In October 2022, we entered into another joint venture with Lewis for the development of our 17-acre East Area I Retained Property (“Retained Property”), which is located within the East Area I property.
California-grown lemons are available throughout the year, with peak production periods occurring from January through August. The storage life of fresh lemons generally ranges from one to 18 weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain. Avocados.
The storage life of fresh lemons generally ranges from one to 18 weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain. Avocados. We are one of the largest avocado growers in the United States with approximately 1,200 acres of avocados planted throughout Ventura County.
Limoneira is committed to protecting the human rights, safety and dignity of the people who contribute to the success of our business. We are committed to improving the lives of all our stakeholders by helping to provide access to our products and increasing the diversity of our workforce.
We are committed to improving the lives of all our stakeholders by helping to provide access to our products and increasing the diversity of our workforce. We also seek to support the welfare of the people who produce, process and harvest the products we sell.
We market and sell lemons directly to our food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia, Europe and certain other international markets.
We market and sell lemons directly to our food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia and certain other international markets. We are one of the largest lemon growers in the United States with approximately 3,500 acres of lemons planted primarily in Ventura County, California and in Yuma County, Arizona.
Our residential units provide affordable housing to many of our employees, including our agribusiness employees. Employees live close to their work, which reduces traffic and commuting times. This unique employment benefit helps us maintain a dependable, long-term employee base. We partner with some local schools to provide transportation for residents.
This unique employment benefit helps us maintain a dependable, long-term employee base. We partner with some local schools to provide transportation for residents.
We sell our avocados, oranges, specialty citrus and other crops to third-party packinghouses and our wine grapes to wine producers. Competition The agribusiness crop markets are intensely competitive, but no single producer has any significant market power over any market segments, as is consistent with the production of most agricultural commodities.
Competition The agribusiness crop markets are intensely competitive, but no single producer has any significant market power over any market segments, as is consistent with the production of most agricultural commodities. Generally, there are a large number of global producers that sell through joint marketing organizations and cooperatives.
We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in Chile and our Trapani Fresh farming operations in Argentina. For more than 100 years, we have been making strategic investments in California agriculture and real estate. We currently have an interest in two real estate development projects in California.
We used ground water from the Cadiz Valley Basin in California's San Bernardino County. For more than 100 years, we have been making strategic investments in California agriculture and real estate. We currently have an interest in two real estate development projects in California.
A portion of our oranges and specialty citrus is marketed and sold under the Sunkist brand by Sunkist and orders are processed by Sunkist-member packinghouses. As an agricultural cooperative, Sunkist coordinates the sales and marketing of the oranges and specialty citrus and orders are processed by Sunkist-member packinghouses for direct shipment to customers.
As an agricultural cooperative, Sunkist coordinated the sales and marketing of the oranges and specialty citrus and orders were processed by Sunkist-member packinghouses for direct shipment to customers. We currently market our wine grapes utilizing processors that are not members of agricultural cooperatives. Our wine grapes are harvested and sold to various wine producers.
The electricity generated by these investments provides us with a significant portion of the electricity required to operate our packinghouse and cold storage facilities located in Santa Paula, California and provides a significant portion of the electricity required to operate four deep-water well pumps at one of our ranches in Tulare County, California.
The electricity generated by these investments provides us with a significant portion of the electricity required to operate our packinghouse and cold storage facilities located in Santa Paula, California. Additionally, these investments support our sustainable agricultural practices, reduce our dependence on fossil-based electricity generation and lower our carbon footprint.
Fiscal Year 2022 Highlights and Recent Developments We are equal partners in a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of our East Area I real estate development project and formed Limoneira Lewis Community Builders, LLC ("LLCB") as the development entity.
In November 2015, we entered into a joint venture with the Lewis Group of Companies (“Lewis”) for the residential development of our East Area I real estate development project.
Our housing, commercial and land rental operations provide us with a consistent, dependable source of cash flow that helps to fund our overall activities. Additionally, we believe our housing rental operation allows us to offer a unique benefit to our employees. • Opportunistically Lease Land to Third-Party Crop Farmers .
Other Operations With respect to our rental operations and real estate development activities, key elements of our strategy include the following: • Rental and Housing Units . Our housing, commercial and land rental operations provide us with a consistent, dependable source of cash flow that helps to fund our overall activities.
We intend to redeploy our future financial gains to acquire additional income-producing real estate investments and agricultural properties. • Selectively and Responsibly Develop our Agricultural Land . We recognize that long-term strategies are required for successful real estate development activities.
When we determine that leasing the land to third-party row crop farmers would be more profitable than farming the land, we intend to seek third-party row crop tenants. • Selectively and Responsibly Develop our Agricultural Land . We recognize that long-term strategies are required for successful real estate development activities.
We offer competitive pay and best-in-class benefits, including a 401k plan with matching contribution opportunities, comprehensive paid healthcare plans, wellness programs, and tuition reimbursement. We own and maintain 257 residential housing units located mainly in Ventura and Tulare Counties in California. We lease these housing units to employees, former employees and non-employees.
We have excellent results from our safety programs compared to similar companies within our industry. We strive to be a great place for our employees to work and live. We offer competitive pay and best-in-class benefits, including a 401k plan with matching contribution opportunities, comprehensive paid healthcare plans, wellness programs and tuition reimbursement.
There are many varieties of lemons, with the Lisbon, Eureka and Genoa being the predominant varieties marketed on a worldwide basis. Approximately 88% of our lemon plantings are of the Lisbon, Eureka and Genoa varieties and approximately 12% are of other varieties such as sweet Meyer lemons, Proprietary Seedless lemons and Pink Variegated lemons.
Approximately 96% of our lemon plantings are of the Lisbon, Eureka and Genoa varieties and approximately 4% are of other varieties such as sweet Meyer lemons and Proprietary Seedless lemons. California-grown lemons are available throughout the year, with peak production periods occurring from January through August.
We regularly monitor the profitability of our fruit-producing acreage to ensure acceptable per acre returns. When we determine that leasing the land to third-party row crop farmers would be more profitable than farming the land, we intend to seek third-party row crop tenants. • Opportunistically Expand our Income-Producing Commercial and Industrial Rental Assets .
Additionally, we believe our housing rental operation allows us to offer a unique benefit to our employees. • Opportunistically Lease Land to Third-Party Crop Farmers . We regularly monitor the profitability of our fruit-producing acreage to ensure acceptable per acre returns.
On December 20, 2022, we declared a cash dividend of $0.075 per common share payable on January 13, 2023, in the aggregate amount of $1.3 million to stockholders of record as of January 3, 2023. In fiscal year 2020, we entered into an agreement to sell our Sevilla property for $2.7 million, which closed on November 30, 2022.
At this time, we cannot predict the impact that such strategic alternatives might have on our business, operations or financial condition. On December 19, 2023, we declared a cash dividend of $0.075 per common share to be paid on January 12, 2024, in the aggregate amount of approximately $1.3 million to stockholders of record as of January 2, 2024.
We received net proceeds of $2.6 million and recorded an immaterial loss in the first quarter of fiscal year 2023. COVID-19 Pandemic The COVID-19 pandemic has had an adverse impact on the industries and markets in which we conduct business.
There are no remaining benefit obligations or plan assets and the remaining accumulated other comprehensive loss was fully recognized. On November 30, 2022, we sold our Sevilla property, received net proceeds of $2.6 million and recorded an immaterial loss in the first quarter of fiscal year 2023.
Removed
In addition to growing lemons and avocados, we grow oranges and a variety of specialty citrus and other crops.
Added
These projects include multi-family housing, single-family homes and apartments of approximately 800 units in various stages of planning and development. 5 Fiscal Year 2023 Highlights and Recent Developments On October 10, 2022, we entered into a Purchase and Sale Agreement, as amended (the “Agreement”), with PGIM Real Estate Finance, LLC (“PGIM”) to sell 3,537 acres of land and citrus orchards in Tulare County, California (the “Northern Properties”) for an adjusted purchase price of approximately $100.0 million.
Removed
We also use ground water from the Cadiz Valley Basin in California’s San Bernardino County and surface water in Arizona from the Colorado River through the Yuma Mesa Irrigation and Drainage District (“YMIDD”).
Added
The agreement became effective on January 25, 2023, when the Board of Directors (the “Board”) approved the Agreement, binding us to sell the Northern Properties and the transaction closed on January 31, 2023. We received net cash proceeds of approximately $98.4 million and recorded a gain of approximately $40.0 million. The proceeds were used primarily to pay down debt.
Removed
These projects include multi-family housing, single-family homes and apartments of approximately 900 units in various stages of planning and development.
Added
On January 31, 2023, we entered into a Farm Management Agreement (the “FMA”) with an affiliate of PGIM to provide farming, management and operations services related to the Northern Properties. The FMA has an initial term expiring March 31, 2024, and thereafter continuing from year to year unless earlier terminated under the terms of the FMA.
Removed
LLCB has closed on lot sales representing 586 units from inception through October 31, 2022. In October 2022, we entered 5 into a joint venture with Lewis for the development of our 17-acre East Area I Retained Property (“Retained Property”).
Added
Further, on January 31, 2023, we entered into a Grower Packing and Marketing Agreement to provide packing, marketing and selling services for lemons harvested on the Northern Properties for a minimum five-year term, subject to certain benchmarking standards.
Removed
We formed LLCB II, LLC ("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 approximately $4.7 million, of which $0.5 million was deferred.
Added
During the three months ended January 31, 2023, the Company made funding contributions of $2.5 million to fully fund and settle the plan obligations of the Limoneira Company Retirement Plan. Lump sum payments were made to a portion of the active and vested terminated participants and annuities were purchased for all remaining participants from an insurance company.
Removed
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 project.
Added
On April 18, 2023, we entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) with Southern California Edison and Edison International to formally resolve any and all claims related to the Thomas Fire in fiscal year 2018. Under the terms of the Settlement Agreement, the Company was awarded a total settlement of $9.0 million.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the lenders under our current or future indebtedness were to accelerate the payment of the indebtedness, we cannot assure you that our assets or cash flow would be sufficient to repay in full our outstanding indebtedness. 21 Despite our relatively high current indebtedness levels and the restrictive covenants set forth in agreements governing our indebtedness, we may still incur significant additional indebtedness, including secured and guaranteed indebtedness.
Biggest changeIf we were unable to repay those amounts, our lenders could proceed against the collateral granted to them to secure the indebtedness. If the lenders under our current or future indebtedness were to accelerate the payment of the indebtedness, we cannot assure you that our assets or cash flow would be sufficient to repay in full our outstanding indebtedness.
In addition, the Sarbanes-Oxley Act of 2002, as well as rules promulgated by the SEC and NASDAQ, require us to adopt corporate governance practices applicable to U.S. public companies. These rules and regulations may increase our legal and financial compliance costs, which could adversely affect the trading price of our common stock. Item 1B. Unresolved Staff Comments None.
In addition, the Sarbanes-Oxley Act of 2002, as well as rules promulgated by the SEC and NASDAQ, require us to adopt corporate governance practices applicable to U.S. public companies. These rules and regulations may increase our legal and financial compliance costs, which could adversely affect the trading price of our common stock. Item 1B. Unresolved Staff Comments None. 28
Although we exercise prudent oversight of the credit ratings and financial strength of our major business partners and seek to diversify our risk to any single business partner, there can be no assurance that there will not be a bank, insurance company, supplier, customer or other financial 19 partner that is unable to meet its contractual commitments to us.
Although we exercise prudent oversight of the credit ratings and financial strength of our major business partners and seek to diversify our risk to any single business partner, there can be no assurance that there will not be a bank, insurance company, supplier, customer or other financial partner that is unable to meet its contractual commitments to us.
Industry consolidation (horizontally and vertically) and other factors have increased the buying leverage of the major grocery retailers in our markets, which may put further downward pressure on our pricing and volume and could adversely affect our results of operations. Our earnings are sensitive to fluctuations in market supply and prices and demand for our products.
Industry consolidation (horizontally and vertically) and other factors have increased the buying leverage of the major grocery retailers in our markets, which may put further downward pressure on our pricing and volume and could adversely affect our results of operations. 17 Our earnings are sensitive to fluctuations in market supply and prices and demand for our products.
In addition, current or future federal or state healthcare legislation and regulation, including the Affordable Care Act, may increase our medical costs or the medical costs of our labor contractors that could be passed on to us. Changes in immigration laws could impact the ability of Limoneira to harvest its crops.
In addition, current or future federal or state healthcare legislation and regulation, including the Affordable Care Act, may increase our medical costs or the medical costs of our labor contractors that could be passed on to us. 18 Changes in immigration laws could impact the ability of Limoneira to harvest its crops.
Any adverse change in the economic climate of California, and any adverse change in the political or 23 regulatory climate of California or Ventura County, could adversely affect our real estate development activities. Ultimately, our ability to sell or lease lots may decline as a result of weak economic conditions or restrictive regulations.
Any adverse change in the economic climate of California, and any adverse change in the political or regulatory climate of California or Ventura County, could adversely affect our real estate development activities. Ultimately, our ability to sell or lease lots may decline as a result of weak economic conditions or restrictive regulations.
It is also possible in a rural area like ours that no market for the project will develop as projected. 22 A recession in the global economy, or a downturn in national or regional economic conditions, could adversely impact our real estate development business.
It is also possible in a rural area like ours that no market for the project will develop as projected. A recession in the global economy, or a downturn in national or regional economic conditions, could adversely impact our real estate development business.
Our strategy to expand international production and marketing may not be successful and may subject us to risks associated with doing business in corrupt environments. While we intend to expand our lemon supply sources to international markets and explore opportunities to expand our international production and marketing of lemons, we may not be successful in implementing this strategy.
Our strategy to expand international supply and marketing may not be successful and may subject us to risks associated with doing business in corrupt environments. While we intend to expand our lemon supply sources to international markets and explore opportunities to expand our marketing of lemons, we may not be successful in implementing this strategy.
In 2022, the Board of Governors of the Federal Reserve System took actions in tightening the monetary policy that resulted in higher interest rates prevailing in the marketplace. Market interest rates may continue to increase in the future and the increase may materially and negatively affect us.
In 2023 and 2022, the Board of Governors of the Federal Reserve System took actions in tightening the monetary policy that resulted in higher interest rates prevailing in the marketplace. Market interest rates may continue to increase in the future and the increase may materially and negatively affect us.
We bear the risk that the rates we are charged by our lender will increase faster than the earnings and cash flow of our business, which could reduce profitability, adversely affect our ability to service our debt, cause us to breach covenants contained in our Farm Credit West Credit Facility, which could materially adversely affect our business, financial condition and results of operations.
We bear the risk that the rates we are charged by our lender will increase faster than the earnings and cash flow of our business, which could reduce profitability, adversely affect our ability to service our debt, cause us to breach covenants contained in our AgWest Farm Credit Facility, which could materially adversely affect our business, financial condition and results of operations.
The lack of sufficient water would severely impact our ability to produce crops or develop real estate. The average rainfall in Ventura, Tulare, San Luis Obispo and San Bernardino Counties in California is substantially below amounts required to grow crops and therefore we are dependent on our surface water rights and rights to pump water from underground aquifers.
The lack of sufficient water would severely impact our ability to produce crops or develop real estate. The average rainfall in Ventura and San Luis Obispo Counties in California is substantially below amounts required to grow crops and therefore we are dependent on our surface water rights and rights to pump water from underground aquifers.
If such sources 24 were insufficient, we would seek additional capital in the form of debt from a variety of potential sources, including bank financing.
If such sources were insufficient, we would seek additional capital in the form of debt from a variety of potential sources, including bank financing.
Costs may increase as we pump more water than our historical averages and federal, state and local water delivery infrastructure costs may increase to access these limited water supplies. We have an ongoing plan for irrigation improvements continuing in fiscal year 2023 that includes drilling new wells and upgrading existing wells and irrigation systems.
Costs may increase as we pump more water than our historical averages and federal, state and local water delivery infrastructure costs may increase to access these limited water supplies. We have an ongoing plan for irrigation improvements continuing in fiscal year 2024 that includes drilling new wells and upgrading existing wells and irrigation systems.
These contractual arrangements may not be as effective in providing direct control over this business segment. For example, our third-party advisors could fail to take actions required for our real estate development businesses despite their contractual obligation to do so.
These contractual arrangements may not be as effective in providing direct control over this business division. For example, our third-party advisors could fail to take actions required for our real estate development businesses despite their contractual obligation to do so.
This could have a material adverse effect on our business, which could impact our results of operations and our financial condition. Risks Related to Our Indebtedness We may be unable to generate sufficient cash flow to service our debt obligations. To service our debt, we require a significant amount of cash.
This could have a material adverse effect on our business, which could impact our results of operations and our financial condition. Risks Related to Our Indebtedness We may be unable to generate sufficient cash flow to service our debt obligations. To service our debt, we require a certain amount of cash.
We may encounter risks associated with the real estate joint ventures we entered into in November 2015 and October 2022 with the Lewis Group of Companies including: • the joint ventures may not perform financially or operationally as expected; • land values, project costs, sales absorption or other assumptions included in the development plans may cause the joint ventures’ operating results to be less than expected; • the joint ventures may not be able to obtain project loans on acceptable terms; • the joint venture partners may not be able to provide capital to the joint ventures in the event external financing or project cash flows are not sufficient to finance the joint ventures’ operations; • the joint venture partners may not manage the project properly; and • disagreements could occur between the joint venture partners that could affect the operating results of the joint ventures or could result in a sale of a partner’s interest or the joint ventures at undesirable values.
We may encounter risks associated with the real estate joint ventures we entered into in November 2015 and October 2022 with the Lewis Group of Companies including: • the joint ventures may not perform financially or operationally as expected; • land values, project costs, sales absorption or other assumptions included in the development plans may cause the joint ventures’ operating results to be less than expected; • the joint ventures may not be able to obtain project loans on acceptable terms; • the joint venture partners may not be able to provide capital to the joint ventures in the event external financing or project cash flows are not sufficient to finance the joint ventures’ operations; • the joint venture partners may not manage the project properly; and • disagreements could occur between the joint venture partners that could affect the operating results of the joint ventures or could result in a sale of a partner’s interest or the joint ventures at undesirable values. 25 We may encounter other risks that could impact our ability to develop our land.
We rely on contractual arrangements with third-party advisors to assist us in carrying out our real estate development projects and are subject to risks associated with such arrangements. We utilize third-party contractor and consultant arrangements to assist us in operating our real estate development segment.
We rely on contractual arrangements with third-party advisors to assist us in carrying out our real estate development projects and are subject to risks associated with such arrangements. We utilize third-party contractor and consultant arrangements to assist us in operating our real estate development division.
ACP is an aphid-like insect that is a serious pest to all citrus plants because it can transmit the disease Huanglongbing ("HLB") when it feeds on the plants' leaves and trees.
ACP is an aphid-like insect that is a serious pest to all citrus plants because it can transmit the disease Huanglongbing (“HLB”) when it feeds on the plants' leaves and trees.
We could experience a reduction in revenues or reduced cash flows if we are unable to obtain reasonably priced financing to support our real estate development projects and land development activities. The real estate development industry is capital intensive, and development requires significant up-front expenditures to develop land and begin real estate construction.
We could experience a reduction in net income or reduced cash flows if we are unable to obtain reasonably priced financing to support our real estate development projects and land development activities. The real estate development industry is capital intensive, and development requires significant up-front expenditures to develop land and begin real estate construction.
Our failure to comply with this covenant in the future may result in the declaration of an event of default under our Farm Credit West Credit Facility.
Our failure to comply with this covenant in the future may result in the declaration of an event of default under our AgWest Farm Credit Facility.
We have an infrastructure that has sufficient capacity for our lemon production needs, but if we lose machinery or facilities due to natural disasters or mechanical failure, we may not be able to operate at a sufficient capacity to meet our lemon production needs.
We depend on our infrastructure to have sufficient capacity to handle our annual lemon production needs. We have an infrastructure that has sufficient capacity for our lemon production needs, but if we lose machinery or facilities due to natural disasters or mechanical failure, we may not be able to operate at a sufficient capacity to meet our lemon production needs.
The State of Arizona wage rates rise each year based on the annual cost of living and increased from $12.15 per hour to $12.80 per hour, effective January 1, 2022, and will increase to $13.85 per hour in 2023.
The State of Arizona wage rates rise each year based on the annual cost of living and increased from $12.80 per hour to $13.85 per hour, effective January 1, 2023, and will increase to $14.35 per hour in 2024.
The trading price of our common stock may be significantly affected by various factors, including: 26 • quarterly fluctuations in our operating results; • changes in investors’ and analysts’ perception of the business risks and conditions of our business; • our ability to meet the earnings estimates and other performance expectations of financial analysts or investors; • unfavorable commentary or downgrades of our stock by equity research analysts; • fluctuations in the stock prices of our peer companies or in stock markets in general; and • general economic or political conditions.
The trading price of our common stock may be significantly affected by various factors, including: • quarterly fluctuations in our operating results; • changes in investors’ and analysts’ perception of the business risks and conditions of our business; • our ability to meet the earnings estimates and other performance expectations of financial analysts or investors; • unfavorable commentary or downgrades of our stock by equity research analysts; • fluctuations in the stock prices of our peer companies or in stock markets in general; and • general economic or political conditions. 27 Concentrated ownership of our common stock creates a risk of sudden change in our share price.
For example, the State of California, where a substantial number of our labor contractors are located, passed regulations that increased minimum wage rates from $14.00 per hour to $15.00 per hour, effective January 1, 2022, and will increase to $15.50 per hour in 2023.
For example, the State of California, where a substantial number of our labor contractors are located, passed regulations that increased minimum wage rates from $15.00 per hour to $15.50 per hour, effective January 1, 2023, and will increase to $16.00 per hour in 2024 due to a cost-of-living increase provision found in the state's minimum wage law.
While we believe we are adequately insured and would attempt to transport our products by alternative means if we were to experience an interruption due to strike, natural disasters or otherwise, we cannot be sure that we would be able to do so or be successful in doing so in a timely and cost-effective manner.
While we believe we are adequately insured and would attempt to transport our products by alternative means if we were to experience an interruption due to strike, natural disasters or otherwise, we cannot be sure that we would be able to do so or be successful in doing so in a timely and cost-effective manner. 20 Events or rumors relating to LIMONEIRA or our other trademarks and related brands could significantly impact our business.
Environmental laws and conditions may (i) result in delays, (ii) cause us to incur additional costs for compliance, where a significant amount of our developable land is located, mitigation and processing land use applications, or (iii) preclude development in specific areas.
Environmental laws and conditions may (i) result in delays, (ii) cause us to incur additional costs for compliance, mitigation and processing land use applications, or (iii) preclude development in specific areas.
Concentrated ownership of our common stock creates a risk of sudden change in our share price. As of October 31, 2022, directors and members of our executive management team beneficially owned or controlled approximately 3.2% of our common stock. Investors who purchase our common stock may be subject to certain risks due to the concentrated ownership of our common stock.
As of October 31, 2023, directors and members of our executive management team beneficially owned or controlled approximately 3.3% of our common stock. Investors who purchase our common stock may be subject to certain risks due to the concentrated ownership of our common stock.
A decision by a regulatory agency to significantly restrict the use of such products that have traditionally been used in the cultivation of one of our principal products could have an adverse impact on us.
The use and disposal of these products in some jurisdictions are subject to regulation by various agencies. A decision by a regulatory agency to significantly restrict the use of such products that have traditionally been used in the cultivation of one of our principal products could have an adverse impact on us.
Several of our Company’s debt agreements use LIBOR as a reference rate, which will be converted to the Secure Overnight Financing Rate ("SOFR") on January 1, 2023. Global capital and credit market issues affect our liquidity, increase our borrowing costs and may affect the operations of our suppliers and customers.
Our Company’s debt agreement with AgWest Farm Credit used LIBOR as a reference rate, which was converted to the Secure Overnight Financing Rate (“SOFR”) on January 1, 2023. Global capital and credit market issues affect our liquidity, increase our borrowing costs and may affect the operations of our suppliers and customers.
Many factors may affect the cost and supply of fresh produce, including external conditions, commodity market fluctuations, currency fluctuations, changes in governmental laws and regulations, agricultural programs, severe and prolonged weather conditions and natural disasters.
Increases in commodity or raw product costs, such as fuel and paper, could adversely affect our operating results. Many factors may affect the cost and supply of fresh produce, including external conditions, commodity market fluctuations, currency fluctuations, changes in governmental laws and regulations, agricultural programs, severe and prolonged weather conditions and natural disasters.
If the third-party advisors fail to perform under their agreements with us, we may have to rely on legal remedies under the law, which may not be effective. In addition, we cannot assure you that our third-party advisors would always act in our best interests.
If the third-party advisors fail to perform under their agreements with us, we may have to rely on legal remedies under the law, which may not be effective.
In January 2018, LLCB entered into a $45.0 million unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities.
If new debt is added to our current debt levels, the related risks that we now face could increase. In January 2018, LLCB entered into a $45.0 million unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities.
Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers). We use ground water and water from local water districts in Tulare County and ground water in San Bernardino County.
Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the un-adjudicated Fillmore and Paso Robles Basins (aquifers). We use federal project water in Arizona from the Colorado River through the YMIDD. We also have acquired water rights in Chile.
We are subject to various land use regulations and require governmental approvals for our developments that could be denied. In planning and developing our land, we are subject to various local, state, and federal statutes, ordinances, rules and regulations concerning zoning, infrastructure design, subdivision of land, and construction.
In planning and developing our land, we are subject to various local, state, and federal statutes, ordinances, rules and regulations concerning zoning, infrastructure design, subdivision of land and construction. All of our new developments require amending existing general plan and zoning designations, so it is possible that our entitlement applications could be denied.
For the foregoing reasons, adverse weather conditions, natural disasters, including earthquakes and wildfires, or other natural conditions, including the effects of climate change, could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects. 16 Our agricultural plantings are potentially subject to damage from disease and pests, which could impose losses on our business and the prevention of which could impose significant additional costs on us.
For the foregoing reasons, adverse weather conditions, natural disasters, including earthquakes and wildfires, or other natural conditions, including the effects of climate change, could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects.
Bureau of Reclamation announced Lake Mead to operate in a Tier 2 shortage, which increases water restrictions for states in the southwest. In January 2023, Arizona will forfeit approximately 21% of the state's yearly allotment of water from Lake Mead.
In August 2022, the Bureau announced Lake Mead to operate in a Tier 2 shortage, which further increased water restrictions. As a result, in January 2023, Arizona forfeited approximately 21% of the state's yearly allotment of water from Lake Mead.
Inflation can have a major impact on our agribusiness operations. The farming operations are most affected by escalating costs and unpredictable revenues (due to an oversupply of certain crops) and very high irrigation water costs. High fixed water costs related to our farm lands will continue to adversely affect earnings.
The farming operations are most affected by escalating costs, unpredictable revenues (due to an oversupply of certain crops) and very high irrigation water costs. High fixed water costs related to our farm lands will continue to adversely affect earnings. Prices received for many of our products are dependent upon prevailing market conditions and commodity prices.
Some of our debt is based on variable rates of interest, which could result in higher interest expenses in the event of an increase in the interest rates. Our Farm Credit West Credit Facility currently bears interest at a variable rate, which will generally change as interest rates change.
Defaults by LLCB could increase our indebtedness. 22 Some of our debt is based on variable rates of interest, which could result in higher interest expenses in the event of an increase in the interest rates. Our AgWest Farm Credit Facility is subject to variable rates, which generally change as interest rates change.
However, if future drought conditions are worse than prior drought conditions or if regulatory responses to such conditions limit our access to water, our business could be negatively impacted by these conditions and responses in terms of access to water and/or cost of water.
However, if future drought conditions are worse than prior drought conditions or if regulatory responses to such conditions limit our access to water, our business could be negatively impacted by these conditions and responses in terms of access to water and/or cost of water. 19 The use of herbicides, pesticides and other potentially hazardous substances in our operations may lead to environmental damage and result in increased costs to us.
In response, we entered into a fallowing agreement and we are assessing the impact these additional reductions may have on our Arizona orchards. For fiscal year 2022, irrigation costs for our agricultural operations were $1.9 million higher than fiscal year 2021.
In response to these water shortages, we entered into fallowing agreements during fiscal years 2023 and 2022 and continue to assess the impact these reductions may have on our Arizona orchards. For fiscal year 2023, irrigation costs for our agricultural operations were higher than fiscal year 2022.
In such cases, payment of such costs or damages could have a material adverse effect on our business, results of operations and financial condition. Environmental and other regulation of our business, including potential climate change regulation, could adversely impact us by increasing our production cost or restricting our ability to import certain products into the United States.
Environmental and other regulation of our business, including potential climate change regulation, could adversely impact us by increasing our production cost or restricting our ability to import certain products into the United States. Our business depends on the use of fertilizers, pesticides and other agricultural products.
Our earnings may be affected by seasonal factors, including: • the seasonality of our supplies and consumer demand; • the ability to process products during critical harvest periods; and • the timing and effects of ripening and perishability. 17 Increases in commodity or raw product costs, such as fuel and paper, could adversely affect our operating results.
Our earnings may be subject to seasonal variability. Our earnings may be affected by seasonal factors, including: • the seasonality of our supplies and consumer demand; • the ability to process products during critical harvest periods; and • the timing and effects of ripening and perishability.
The ongoing COVID-19 pandemic has also reduced the demand for our products resulting in excess supply. Fresh produce is highly perishable and generally must be brought to market and sold soon after harvest.
The COVID-19 pandemic also reduced the demand for our products resulting in excess supply. Fresh produce is highly perishable and generally must be brought to market and sold soon after harvest. Some items, such as avocados and oranges, must be sold more quickly, while other items, such as lemons, can be held in cold storage for longer periods of time.
Lack of available credit to finance real estate purchases can also negatively impact demand. Any downturn in the economy or consumer confidence can also be expected to result in reduced housing demand and slower industrial development, which would negatively impact the demand for land we are developing.
Any downturn in the economy or consumer confidence can also be expected to result in reduced housing demand and slower industrial development, which would negatively impact the demand for land we are developing. 23 We are subject to various land use regulations and require governmental approvals for our developments that could be denied.
Our revolving and non-revolving credit facility with the Farm Credit West Credit Facility contain a financial covenant that requires us to maintain compliance with a specified debt service coverage ratio greater than or equal to 1:25:1.0 on an annual basis. At October 31, 2022, we were in compliance with such debt service coverage ratio.
Our revolving and non-revolving credit facility with the AgWest Farm Credit Facility contain a financial covenant that requires us to maintain compliance with a specific debt service coverage ratio on an annual basis.
These laws generally prohibit companies and their employees, contractors or agents from making improper payments to government officials for the purpose of obtaining or retaining business.
These laws generally prohibit companies and their employees, contractors or agents from making improper payments to government officials for the purpose of obtaining or retaining business. Failure to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our financial condition and results of operations.
System security risks, data protection breaches, cyber-attacks and systems integration issues could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.
Therefore, it is difficult for us to accurately predict revenue and we cannot pass on cost increases caused by general inflation, except to the extent reflected in market conditions and commodity prices. 26 System security risks, data protection breaches, cyber-attacks and systems integration issues could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.
Item 1A. Risk Factors Risks Related to Our Agribusiness Operations Adverse weather conditions, natural disasters, including earthquakes and wildfires, and other natural conditions, including the effects of climate change, could impose significant costs and losses on our business.
Accordingly, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of the Company could cause our stock price to fluctuate significantly. 16 Risks Related to Our Agribusiness Operations Adverse weather conditions, natural disasters, including earthquakes and wildfires, and other natural conditions, including the effects of climate change, could impose significant costs and losses on our business.
Our international sales are primarily transacted in U.S. dollars. Our results of operations are affected by fluctuations in currency exchange rates in both sourcing and selling locations.
Our international sales are primarily transacted in U.S. dollars. Our results of operations are affected by fluctuations in currency exchange rates in both sourcing and selling locations. In the past, periods of a strong U.S. dollar relative to other currencies have led international customers, particularly in Asia, to find alternative sources of fruit.
We currently depend heavily on the services of our key management personnel. The loss of any key personnel could materially and adversely affect our results of operations or financial condition. Our success will also depend in part on our ability to attract and retain additional qualified management personnel. Inflation can have a significant adverse effect on our operations.
Our success will also depend in part on our ability to attract and retain additional qualified management personnel. Inflation can have a significant adverse effect on our operations. Inflation can have a major impact on our agribusiness operations.
Bureau of Reclamation declared a Level 1 Shortage Condition at Lake Mead in the Lower Colorado River Basin for the first time ever, requiring shortage reductions and water savings contributions for states in the southwest. In January 2022, Arizona experienced water releases from Lake Mead reduced by approximately 18% of the state’s annual apportionment. In August 2022, the U.S.
We continue to assess the impact drought conditions may have on our California orchards. In August 2021, the U.S. Bureau of Reclamation (the “Bureau”) declared a Level 1 shortage condition at Lake Mead in the Lower Colorado River Basin for the first time ever, requiring shortage reductions and water savings contributions for states in the southwest.
If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt.
These factors include among others: • economic and competitive conditions; • changes in laws and regulations; • operating difficulties, increased operating costs or pricing pressures we may experience; and • delays in implementing any strategic projects. 21 If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt.
The Loan contains certain customary default provisions and LLCB may prepay any amounts outstanding under the Loan without penalty. The obligations under the Loan are guaranteed by certain principals from Lewis and us. Defaults by LLCB could increase our indebtedness.
Effective as of February 22, 2023, the Loan maturity date was extended to February 22, 2024, and the maximum borrowing amount was reduced to $35.0 million. The Loan contains certain customary default provisions and LLCB may prepay any amounts outstanding under the Loan without penalty. The obligations under the Loan are guaranteed by certain principals from Lewis and us.
Incurring more indebtedness could increase the risks associated with our substantial indebtedness. Subject to the restrictions in our credit facilities, we may incur significant additional indebtedness. If new debt is added to our current debt levels, the related risks that we now face could increase.
Despite our current indebtedness levels and the restrictive covenants set forth in agreements governing our indebtedness, we may still incur significant additional indebtedness, including secured and guaranteed indebtedness. Incurring more indebtedness could increase the risks associated with our overall indebtedness. Subject to the restrictions in our credit facilities, we may incur significant additional indebtedness.
If we are unable to complete land development projects within forecasted time and budget expectations, if at all, our financial results may be negatively affected. We intend to develop land and real estate properties as suitable opportunities arise, taking into consideration the general economic climate.
We intend to develop land and real estate properties as suitable opportunities arise, taking into consideration the general economic climate.
We may have to pay for the costs or damages associated with the improper application, accidental release or use or misuse of such substances. Our insurance may not be adequate to cover such costs or damages or may not continue to be available at a price or under terms that are satisfactory to us.
Our insurance may not be adequate to cover such costs or damages or may not continue to be available at a price or under terms that are satisfactory to us. In such cases, payment of such costs or damages could have a material adverse effect on our business, results of operations and financial condition.
The use of herbicides, pesticides and other potentially hazardous substances in our operations may lead to environmental damage and result in increased costs to us. We use herbicides, pesticides and other potentially hazardous substances in the operation of our business.
We use herbicides, pesticides and other potentially hazardous substances in the operation of our business. We may have to pay for the costs or damages associated with the improper application, accidental release or use or misuse of such substances.
Due to the discovery of ACP in our orchards, we have experienced costs related to the quarantine and treatment of ACP. To date, HLB has been detected in California, however there has been no HLB detected in our orchards. There can be no assurance that HLB will not be further detected in the future.
Due to the discovery of ACP in our orchards, we have experienced costs related to the quarantine and treatment of ACP. In September 2023, two HLB-positive citrus trees were detected on one residential property in the City of Santa Paula, California.
In the past, periods of a strong U.S. dollar relative to other currencies have led international customers, particularly in Asia, to find alternative sources of fruit. 25 We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects .
We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects . We currently depend heavily on the services of our key management personnel. The loss of any key personnel could materially and adversely affect our results of operations or financial condition.
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Some items, such as avocados, oranges and specialty citrus, must be sold more quickly, while other items, such as lemons, can be held in cold storage for longer periods of time.
Added
Item 1A. Risk Factors Risks Related to Our Business Approach We cannot assure you that our evaluation of potential strategic alternatives to enhance value for stockholders will be successful; and there may be negative impacts on our business and stock price as a result of the process of exploring strategic alternatives.
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Our earnings may be subject to seasonal variability.
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On December 1, 2023, the Company announced the commencement of a process to explore strategic alternatives, which could include, but not be limited to, a sale of all or parts of the Company, merger or other transaction.
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We use federal project water in Arizona from the Colorado River through the YMIDD. We also have acquired water rights in Chile. 18 California has experienced below average precipitation since the 2019 - 2020 rainfall season. According to the U.S.
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The Board has not set a timetable for the completion of this review process and there can be no assurance that it will result in any transaction or outcome.
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Drought Monitor, San Bernardino County was experiencing severe drought conditions, Ventura County was experiencing extreme drought conditions and Tulare County was experiencing exceptional drought conditions as of October 31, 2022. In October 2021, the California Governor declared a drought state of emergency statewide.
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Whether the process will result in any additional transactions, our ability to complete any transaction, and if our Board decides to pursue one or more transactions, will depend on numerous factors, some of which are beyond our control.
Removed
Federal officials who oversee the Central Valley Project, California’s largest water delivery system, allocated 0% of the contracted amount of water to San Joaquin Valley farmers in 2022, compared to 5% in 2021 and 100% in 2017 through 2020. We are assessing the impact these reductions may have on our California orchards. In August 2021, the U.S.
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Such factors include the interest of potential acquirers or strategic partners in a potential transaction, the value potential acquirers or strategic partners attribute to our businesses and their respective prospects, market conditions, interest rates and industry trends.
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Our business depends on the use of fertilizers, pesticides and other agricultural products. The use and disposal of these products in some jurisdictions are subject to regulation by various agencies.
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Our stock price may be adversely affected if the evaluation does not result in additional transactions or if one or more transactions are consummated on terms that investors view as unfavorable to us.
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Events or rumors relating to LIMONEIRA or our other trademarks and related brands could significantly impact our business.
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Even if one or more additional transactions are completed, there can be no assurance that any such transactions will be successful or have a positive effect on stockholder value. Our Board may also determine that no additional transaction is in the best interest of our stockholders.
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Failure to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our financial condition and results of operations. 20 We depend on our infrastructure to have sufficient capacity to handle our annual lemon production needs.
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In addition, our financial results and operations could be adversely affected by the strategic process and by the uncertainty regarding its outcome. The attention of management and our Board could be diverted from our core business operations.
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These factors include among others: • economic and competitive conditions; • changes in laws and regulations; • operating difficulties, increased operating costs or pricing pressures we may experience; and • delays in implementing any strategic projects.
Added
We have diverted capital and other resources to the process that otherwise could have been used in our business operations, and we will continue to do so until the process is completed.
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If we were unable to repay those amounts, our lenders could proceed against the collateral granted to them to secure the indebtedness.
Added
We could incur substantial expenses associated with identifying and evaluating potential strategic alternatives, including those related to employee retention payments, equity compensation, severance pay and legal, accounting and financial advisor fees. In addition, the process could lead us to lose or fail to attract, retain and motivate key employees, and to lose or fail to attract customers or business partners.
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The Loan, as modified and extended, matures February 22, 2023 and has a one-year extension option through February 22, 2024 subject to terms and conditions as defined in the agreement, with the maximum borrowing amount reduced to $35.0 million during the extension period. In December 2022, LLCB exercised the extension option.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur agribusiness land holdings are summarized below as of October 31, 2022 (in thousands, except per acre amounts): 27 Ranch Name Acres Book Value Acquisition Date Book Value per Acre Limoneira/Olivelands Ranch 1,700 $ 767 1907, 1913, 1920 $ 451 La Campana Ranch 300 758 1964 $ 2,527 Orchard Farm Ranch 1,100 3,240 1990 $ 2,945 Rancho La Cuesta Ranch 200 2,899 1994 $ 14,495 Porterville Ranch 700 6,427 1997 $ 9,181 Ducor Ranch 900 6,223 1997 $ 6,914 Jencks Ranch 100 846 2007 $ 8,460 Windfall Farms 700 16,162 2009 $ 23,089 Stage Coach Ranch 100 603 2012 $ 6,030 Martinez Ranch 200 1,363 2012 $ 6,815 Associated Citrus Packers 1,300 15,035 2013 $ 11,565 Lemons 400 800 5,182 2013 $ 6,478 Sheldon Ranches 600 9,618 2016 $ 16,030 Pan de Azucar 200 2,292 2017 $ 11,461 San Pablo 3,300 5,586 2018 $ 1,693 Santa Clara 1,200 8,600 2019 $ 7,167 Other agribusiness land 400 1,539 various $ 3,848 13,800 $ 87,140 The book value of our agribusiness land holdings of approximately $87.1 million differs from the land balance of $87.6 million included in property, plant and equipment in the notes to the consolidated financial statements in Item 8 of this Annual Report.
Biggest changeOur agribusiness land holdings are summarized below as of October 31, 2023 ($ in thousands): Ranch Name Acres Book Value Acquisition Date Book Value per Acre Limoneira/Olivelands Ranch 1,700 $ 767 1907, 1913, 1920 $ 451 La Campana Ranch 300 758 1964 $ 2,527 Orchard Farm Ranch 1,100 3,240 1990 $ 2,945 Rancho La Cuesta Ranch 200 2,899 1994 $ 14,495 Windfall Farms 700 16,162 2009 $ 23,089 Associated Citrus Packers 1,300 14,500 2013 $ 11,154 Pan de Azucar 200 2,395 2017 $ 11,975 San Pablo 3,300 5,837 2018 $ 1,769 Santa Clara 1,200 8,600 2019 $ 7,167 Other agribusiness land 600 574 various $ 957 Total agribusiness land holdings 10,600 $ 55,732 The book value of our agribusiness land holdings of approximately $55.7 million differs from the land balance of $56.0 million included in property, plant and equipment in the notes to the consolidated financial statements in Item 8 of this Annual Report as the table above excludes land holdings related to our other operations.
Water for our farming operations located in Ventura County, California is sourced from the existing water resources associated with our land, which includes approximately 8,600 acre-feet of adjudicated water rights in the Santa Paula Basin (aquifer) and the un-adjudicated Fillmore Basin.
Water for our farming operations located in Ventura County, California is sourced from the existing water resources associated with our land, which includes approximately 8,600 acre-feet of adjudicated water rights in the Santa Paula Basin (aquifer) and the un-adjudicated Fillmore Basin (aquifer).
The Association is a not-for-profit, mutual benefit corporation, which represents the interests of all overlying landowners with rights to extract groundwater from the Santa Paula Basin and the City of Santa Paula. We are a member of the Association. Membership in the Association is governed by the Association's Bylaws.
The Association is a not-for-profit, mutual benefit corporation, which represents the interests of all overlying landowners with rights to extract groundwater from the Santa Paula Basin and the City of Santa Paula. We are a member of the Association and membership is governed by the Association's Bylaws.
Our California water resources include approximately 17,000 acre-feet of water affiliated with our owned properties, of which approximately 8,600 acre-feet are adjudicated. Our Yuma, Arizona water resources include approximately 11,700 acre-feet of water sourced from the Colorado River. We own shares in five not-for-profit mutual benefit water companies.
Our California water resources include approximately 17,000 acre-feet of water affiliated with our owned properties, of which approximately 8,600 acre-feet are adjudicated. Our Yuma, Arizona water resources include approximately 11,700 acre-feet of water sourced from the Colorado River. We own shares in various not-for-profit mutual benefit water companies.
We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in La Serena, Chile and our Trapani Fresh farming operations in Argentina. 28 Our rights to extract groundwater from the Santa Paula Basin are governed by the Santa Paula Basin Judgment (the “Judgment”).
We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in La Serena, Chile and our Trapani Fresh farming operations in Argentina. 29 Our rights to extract groundwater from the Santa Paula Basin are governed by the Santa Paula Basin Judgment (the “Judgment”).
Item 2. Properties Real Estate We own our corporate headquarters in Santa Paula, California. We own approximately 8,300 acres of farm land in California, 1,200 acres located in Yuma, Arizona, 3,500 acres in La Serena, Chile and 1,200 acres in Jujuy, Argentina.
Item 2. Properties Real Estate We own our corporate headquarters in Santa Paula, California. We own approximately 4,300 acres of farm land in California, 1,300 acres in Yuma, Arizona, 3,500 acres in La Serena, Chile and 1,200 acres in Jujuy, Argentina.
We own and maintain 257 residential units mainly in Ventura and Tulare Counties that we lease to our employees, former employees and outside tenants and we own several commercial office buildings and properties that are leased to various tenants. We own and have equity investments in real estate development property in the California County of Ventura.
We own and maintain 238 residential units in Ventura County that we lease to our employees, former employees and outside tenants and we own several commercial office buildings and properties that are leased to various tenants. We own and have equity investments in real estate development property in Ventura County, California.
These properties are in various stages of development for up to approximately 900 residential units and approximately 811,000 square feet of commercial space. Water and Mineral Rights Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own.
These properties are in various stages of development for up to approximately 800 residential units. Water and Mineral Rights Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own.
We also lease approximately 1,000 acres of land and have an interest in a partnership that owns approximately 200 acres of land. The land used for agricultural plantings consists of approximately 5,600 acres of lemons, approximately 900 acres of avocados, approximately 1,000 acres of oranges and approximately 1,000 acres of specialty citrus and other crops.
We also lease approximately 100 acres of land and have an interest in a partnership that owns approximately 200 acres of land. The land used for agricultural plantings consists of approximately 3,500 acres of lemons, approximately 1,200 acres of avocados, approximately 100 acres of oranges and approximately 400 acres of other crops.
Our Associated farming operations in Yuma, Arizona source water from the Colorado River through the YMIDD, where we have access to approximately 11,700 acre feet of Class 3 Colorado River water rights.
Our Windfall Farms property located in San Luis Obispo County, California obtains water from wells that derive water from the Paso Robles Basin (aquifer). Our Associated farming operations in Yuma, Arizona source water from the Colorado River through the YMIDD, where we have access to approximately 11,700 acre-feet of Class 3 Colorado River water rights.
We have a 5.5 acre, one-megawatt ground-based photovoltaic solar generator and one-megawatt roof array, which provides the majority of the power to operate our packing facility. We also have a one-megawatt solar array that provides us with a majority of the electricity required to operate four deep water well pumps at one of our ranches in the San Joaquin Valley.
We own our packing facilities located in Santa Paula, California and Yuma, Arizona, where we process and pack our lemons as well as lemons for other growers. We have a 5.5 acre, one-megawatt ground-based photovoltaic solar generator and one-megawatt roof array, which provides the majority of the power to operate our packing facility.
Removed
The table above presents our current land holdings in farming agribusiness operations. We own our packing facilities located in Santa Paula, California and Yuma, Arizona, where we process and pack our lemons as well as lemons for other growers.
Added
We believe that our properties are generally suitable to meet our production needs for the foreseeable future.
Removed
We use a combination of ground water provided by wells that derive water from the San Joaquin Valley Basin and water from various water districts and irrigation districts in Tulare County, California, which is in the agriculturally productive San Joaquin Valley.
Removed
We use ground water provided by wells that derive water from the Cadiz Valley Basin at the Cadiz Ranch in San Bernardino County, California. Our Windfall Farms property located in San Luis Obispo County, California obtains water from wells that derive water from the Paso Robles Basin.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe disclosure called for by Part II, Item 3 regarding our legal proceedings is incorporated by reference herein from Note 17 – Commitments and Contingencies of the Notes to Consolidated Financial Statements in this Annual Report. Item 4. Mine Safety Disclosures Not applicable. 29 PART II
Biggest changeThe disclosure called for by Part II, Item 3 regarding our legal proceedings is incorporated by reference herein from Note 18 – Commitments and Contingencies of the Notes to Consolidated Financial Statements in this Annual Report. Item 4. Mine Safety Disclosures Not applicable. 30 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by Issuer and Affiliated Purchasers Period Total Number of Shares Purchased(1) Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(2) August 1, 2022 through August 31, 2022 — $ — — — September 1, 2022 through September 30, 2022 — $ — — — October 1, 2022 through October 31, 2022 37,236 $ 11.93 — — Total 37,236 — — (1) Shares were acquired from our employees in accordance with our stock-based compensation plan as a result of share withholdings to pay income tax related to the vesting and distribution of restricted stock awards. 31 (2) In fiscal year 2021, our Company's Board of Directors approved a share repurchase program authorizing us to repurchase up to $10.0 million of our outstanding shares of common stock through September 2022.
Biggest changeRecent Sales of Unregistered Securities None. 32 Purchases of Equity Securities by Issuer and Affiliated Purchasers Period Total Number of Shares Purchased (1) Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs August 1, 2023 - August 31, 2023 — $ — — — September 1, 2023 - September 30, 2023 — $ — — — October 1, 2023 - October 31, 2023 37,878 $ 14.29 — — Total 37,878 — — (1) Shares were acquired from employees in accordance with our stock-based compensation plan as a result of share withholdings to pay income tax related to the vesting and distribution of restricted stock awards.
Dividend 2022 Fourth Quarter Ended October 31, 2022 $ 0.075 Third Quarter Ended July 31, 2022 $ 0.075 Second Quarter Ended April 30, 2022 $ 0.075 First Quarter Ended January 31, 2022 $ 0.075 2021 Fourth Quarter Ended October 31, 2021 $ 0.075 Third Quarter Ended July 31, 2021 $ 0.075 Second Quarter Ended April 30, 2021 $ 0.075 First Quarter Ended January 31, 2021 $ 0.075 In December 2022, we declared our quarterly dividend of $0.075 per common share and we expect to continue to pay quarterly dividends at a similar rate to the extent permitted by the financial results of our business and other factors beyond management’s control. 30 Performance Graph The line graph above compares the percentage change in cumulative total stockholder return of our common stock registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with (i) the cumulative total return of the Russell 2000 Index, assuming reinvestment of dividends, and (ii) the cumulative total return of Dow Jones U.S.
Dividend 2023 Fourth Quarter Ended October 31, 2023 $ 0.075 Third Quarter Ended July 31, 2023 $ 0.075 Second Quarter Ended April 30, 2023 $ 0.075 First Quarter Ended January 31, 2023 $ 0.075 2022 Fourth Quarter Ended October 31, 2022 $ 0.075 Third Quarter Ended July 31, 2022 $ 0.075 Second Quarter Ended April 30, 2022 $ 0.075 First Quarter Ended January 31, 2022 $ 0.075 In December 2023, we declared our quarterly dividend of $0.075 per common share and we expect to continue to pay quarterly dividends at a similar rate to the extent permitted by the financial results of our business and other factors beyond management's control. 31 Performance Graph The line graph above compares the percentage change in cumulative total stockholder return of our common stock registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with (i) the cumulative total return of the Russell 2000 Index, assuming reinvestment of dividends, and (ii) the cumulative total return of Dow Jones U.S.
Holders On November 30, 2022, there were approximately 226 registered holders of our common stock. The number of registered holders includes banks and brokers who act as nominees, each of whom may represent more than one stockholder. Dividends The following table presents cash dividends per common share declared and paid in the periods shown.
Holders On November 30, 2023, there were approximately 233 registered holders of our common stock. The number of registered holders includes banks and brokers who act as nominees, each of whom may represent more than one stockholder. Dividends The following table presents cash dividends per common share declared and paid in the periods shown.
Removed
Food Producers Index, assuming reinvestment of dividends. Recent Sales of Unregistered Securities None.
Removed
No shares have been repurchased under this program. As of October 31, 2022, the program has expired and there is no remaining authorization under this program. Item 6. Reserved 32

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRecent Developments – Refer to Part I, Item 1 “Fiscal Year 2022 Highlights and Recent Developments” 33 Results of Operations The following table shows the results of operations for ($ in thousands): Years Ended October 31, 2022 2021 2020 Revenues: Agribusiness $ 179,281 97% $ 161,381 97% $ 159,937 97% Other operations 5,324 3% 4,646 3% 4,622 3% Total net revenues 184,605 100% 166,027 100% 164,559 100% Costs and expenses: Agribusiness 160,651 88% 148,492 86% 157,281 86% Other operations 4,438 2% 4,332 3% 4,504 2% (Gain) loss on disposal of assets (4,500) (2)% 109 — 502 —% Selling, general and administrative 21,815 12% 19,427 11% 21,280 12% Total costs and expenses 182,404 100% 172,360 100% 183,567 100% Operating income (loss): Agribusiness 18,630 12,889 2,656 Other operations 886 314 118 Gain (loss) on disposal of assets 4,500 (109) (502) Selling, general and administrative (21,815) (19,427) (21,280) Operating income (loss) 2,201 (6,333) (19,008) Other (expense) income: Interest income 53 379 362 Interest expense, net of patronage dividends (2,291) (1,501) (2,048) Equity in earnings of investments, net 1,341 3,203 339 Loss on stock in Calavo Growers, Inc. — — (6,299) Other (expense) income, net (955) 89 219 Total other (expense) income (1,852) 2,170 (7,427) Income (loss) before income tax (provision) benefit 349 (4,163) (26,435) Income tax (provision) benefit (823) 266 8,494 Net loss (474) (3,897) (17,941) Loss attributable to noncontrolling interest 238 456 1,506 Net loss attributable to Limoneira Company $ (236) $ (3,441) $ (16,435) 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, loss on stock in Calavo Growers, Inc.
Biggest changeRecent Developments – Refer to Part I, Item 1 “Fiscal Year 2023 Highlights and Recent Developments” 33 Results of Operations The following table shows the results of operations ($ in thousands): Years Ended October 31, 2023 2022 2021 Net revenues: Agribusiness $ 174,381 97 % $ 179,281 97 % $ 161,381 97 % Other operations 5,520 3 % 5,324 3 % 4,646 3 % Total net revenues 179,901 100 % 184,605 100 % 166,027 100 % Costs and expenses: Agribusiness 169,169 99 % 160,651 88 % 148,492 86 % Other operations 4,612 3 % 4,438 2 % 4,332 3 % (Gain) loss on disposal of assets, net (28,849) (17) % (4,500) (2) % 109 — % Gain on legal settlement (2,269) (1) % — — % — — % Selling, general and administrative 26,455 16 % 21,815 12 % 19,427 11 % Total costs and expenses 169,118 100 % 182,404 100 % 172,360 100 % Operating income (loss): Agribusiness 5,212 18,630 12,889 Other operations 908 886 314 Gain (loss) on disposal of assets, net 28,849 4,500 (109) Gain on legal settlement 2,269 — — Selling, general and administrative (26,455) (21,815) (19,427) Operating income (loss) 10,783 2,201 (6,333) Other income (expense): Interest income 364 53 379 Interest expense, net of patronage dividends (494) (2,291) (1,501) Equity in earnings of investments, net 5,322 1,341 3,203 Other (expense) income, net (2,611) (955) 89 Total other income (expense) 2,581 (1,852) 2,170 Income (loss) before income tax (provision) benefit 13,364 349 (4,163) Income tax (provision) benefit (4,247) (823) 266 Net income (loss) 9,117 (474) (3,897) Net loss attributable to noncontrolling interest 283 238 456 Net income (loss) attributable to Limoneira Company $ 9,400 $ (236) $ (3,441) 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, named executive officer cash severance, pension settlement cost, (gain) loss on disposal of assets, net, cash bonus related to sale of assets and gain on legal settlement are important measures to evaluate our results of operations between periods on a more comparable basis.
When events or changes in circumstances exist, we further evaluate the real estate development for impairment by a) comparing undiscounted future cash flows expected to be generated over the life of the real estate development to the respective carrying amount for our real estate development or b) determining if our equity in investment has incurred an other-than-temporary decline.
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 has incurred an other-than-temporary decline.
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 are no longer recoverable.
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.
Costs and expenses associated with our fresh lemons segment include harvest costs, growing costs, cost of fruit we procure from third-party growers and suppliers, transportation costs and packing service charges incurred from the lemon packing segment to pack lemons for sale.
Costs and expenses associated with our fresh lemons segment include growing costs, harvest costs, cost of lemons we procure from third-party growers and suppliers, transportation costs and packing service charges incurred from the lemon packing segment to pack lemons for sale.
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 2022 compared to fiscal year 2021.
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 2023 compared to fiscal year 2022.
For fiscal years 2022, 2021 and 2020, 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. 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).
For fiscal years 2023, 2022 and 2021, 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. 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).
Our current 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 includes oranges, specialty citrus and other crops.
Our current 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 includes oranges, specialty citrus, other crops and farm management services.
The tax provision recorded for fiscal year 2022 differs from the U.S. federal statutory tax rate of 21% due primarily to foreign jurisdictions which are taxed at different rates, state taxes, tax impact of stock-based compensation, nondeductible tax items and valuation allowances on certain deferred tax assets of foreign subsidiaries.
The tax provision recorded for fiscal year 2023 differs from the U.S. federal statutory tax rate of 21.0% due primarily to foreign jurisdictions which are taxed at different rates, state taxes, tax impact of stock-based compensation, nondeductible tax items and valuation allowances on certain deferred tax assets of foreign subsidiaries.
Recent Accounting Pronouncements See Note 2 - Summary of Significant Accounting Policies for information concerning recent accounting pronouncements. 43
Recent Accounting Pronouncements See Note 2 - Summary of Significant Accounting Policies for information concerning recent accounting pronouncements.
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 15,400 acres of land, water resources and other assets to maximize long-term stockholder value.
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 11,100 acres of land, water resources and other assets to maximize long-term stockholder value.
The agribusiness division includes our core operations of farming, harvesting, lemon packing and citrus sales operations. The rental operations division includes our residential and commercial rentals comprised of 257 completed rental units, leased land operations and organic recycling. The real estate development division includes our investments in real estate development projects.
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 comprised of 238 completed rental units, leased land operations and organic recycling. The real estate development division includes our investments in real estate development projects.
For discussion related to the results of operations and changes in financial condition for fiscal year 2021 compared to fiscal year 2020 refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 2021 Form 10-K, which was filed with the United States Securities and Exchange Commission (SEC) on January 10, 2022.
For discussion related to the results of operations and changes in financial condition for fiscal year 2022 compared to fiscal year 2021 refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 2022 Form 10-K, which was filed with the United States Securities and Exchange Commission (SEC) on December 22, 2022.
The first phase of the project broke ground to commence mass grading in November 2017. Project plans currently include approximately 1,500 residential units and site improvements. A total of 586 residential units have closed from the project's inception to October 31, 2022.
The first phase of the project broke ground to commence mass grading in November 2017. Approved project plans currently include approximately 1,500 residential units and site improvements. A total of 707 residential units have closed from the project's inception to October 31, 2023.
Adjusted EBITDA in previous periods did not exclude stock-based compensation which has now been excluded as management believes this is a better representation of cash generated by operations and is consistent with peer company reporting. Adjusted EBITDA for prior periods has been restated to conform to the current presentation.
Adjusted EBITDA in fiscal year 2021 did not exclude stock-based compensation which has now been excluded as management believes this is a better representation of cash generated by operations and is consistent with peer company reporting. Adjusted EBITDA for fiscal year 2021 has been restated to conform to the current presentation.
Cash dividends declared in each of the fiscal years 2022 and 2021 totaled $0.30 per common share and such dividends paid totaled $5.3 million.
Such preferred dividends paid totaled $0.5 million in each of the fiscal years 2023 and 2022. Cash dividends declared in each of the fiscal years 2023 and 2022 totaled $0.30 per common share and such dividends paid totaled $5.4 million in fiscal year 2023 and $5.3 million in fiscal year 2022.
We recorded a gain on the transaction of approximately $4.7 million, of which $0.5 million was deferred. 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.
We recorded a gain on the transaction of approximately $4.7 million, of which $0.5 million was deferred. 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.
Income Taxes We recorded for fiscal years 2022 and 2021 income tax (provision) benefit of $(0.8) million and $0.3 million on pre-tax income (loss) of $0.3 million and $(4.2) million, respectively.
Income Taxes We recorded for fiscal years 2023 and 2022 income tax provision of $4.2 million and $0.8 million on pre-tax income of $13.4 million and $0.3 million, respectively.
The lemon packing segment included $29.8 million and $25.6 million of intersegment revenues for fiscal years 2022 and 2021, respectively, which were charged to the fresh lemons segment to pack lemons for sale. Such intersegment revenues and expenses are eliminated in our consolidated financial statements.
The lemon packing segment included $31.1 million and $29.8 million of intersegment revenues for fiscal years 2023 and 2022, respectively, that were charged to the fresh lemons segment to pack lemons for sale. Such intersegment revenues and expenses are eliminated in our consolidated financial statements.
Costs and expenses associated with our lemon packing segment consist of the cost to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs. For fiscal year 2022, our lemon packing costs and expenses were $43.0 million compared to $36.0 million for fiscal year 2021.
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 and facility operating costs. For fiscal years 2023 and 2022, our lemon packing costs and expenses were $45.7 million and $43.0 million, respectively.
The California avocado crop typically experiences alternating years of high and low production due to plant physiology. During fiscal years 2022 and 2021, 8.2 million and 5.7 million pounds of avocados were sold at average per pound prices of $2.08 and $1.20, respectively.
During fiscal years 2023 and 2022, 3.8 million and 8.2 million pounds of avocados were sold at an average per pound price of $1.06 and $2.08, respectively. The California avocado crop typically experiences alternating years of high and low production due to plant physiology.
The non-GAAP information provided is unique to us and may not be consistent with methodologies used by other companies. 34 EBITDA and adjusted EBITDA are summarized and reconciled to net loss 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): Years Ended October 31, 2022 2021 2020 Net loss attributable to Limoneira Company $ (236) $ (3,441) $ (16,435) Interest income (53) (379) (362) Interest expense, net of patronage dividends 2,291 1,501 2,048 Income tax provision (benefit) 823 (266) (8,494) Depreciation and amortization 9,798 9,812 10,097 EBITDA 12,623 7,227 (13,146) Stock-based compensation 2,732 2,582 2,044 Loss on stock in Calavo Growers, Inc. — — 6,299 Named executive officer cash severance 432 — — Pension settlement cost 607 — — (Gain) loss on disposal of assets (4,500) 109 502 Adjusted EBITDA $ 11,894 $ 9,918 $ (4,301) Fiscal Year 2022 Compared to Fiscal Year 2021 Revenues Total revenues for fiscal year 2022 were $184.6 million compared to $166.0 million for fiscal year 2021.
The non-GAAP information provided is unique to us and may not be consistent with methodologies used by other companies. 34 EBITDA and adjusted EBITDA are summarized and reconciled to net income (loss) 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): Years Ended October 31, 2023 2022 2021 Net income (loss) attributable to Limoneira Company $ 9,400 $ (236) $ (3,441) Interest income (364) (53) (379) Interest expense, net of patronage dividends 494 2,291 1,501 Income tax provision (benefit) 4,247 823 (266) Depreciation and amortization 8,576 9,798 9,812 EBITDA $ 22,353 $ 12,623 $ 7,227 Stock-based compensation 3,841 2,732 2,582 Named executive officer cash severance — 432 — Pension settlement cost 2,700 607 — (Gain) loss on disposal of assets, net (28,849) (4,500) 109 Cash bonus related to sale of assets 2,000 — — Gain on legal settlement (2,269) — — Adjusted EBITDA $ (224) $ 11,894 $ 9,918 Fiscal Year 2023 Compared to Fiscal Year 2022 Revenues Total net revenues for fiscal year 2023 were $179.9 million compared to $184.6 million for fiscal year 2022.
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, 42 and the potential impact of a loss from impairment could be material to our earnings.
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. 42 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.
Additionally, in fiscal years 2022 and 2021, packing costs included $2.4 million and $2.7 million of shipping costs, respectively. • Harvest costs: The increase in fiscal year 2022 was primarily attributable to increased volume of lemons and avocados harvested compared to fiscal year 2021. • 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.
Additionally, in fiscal years 2023 and 2022, packing costs included $2.9 million and $2.4 million of shipping costs, respectively. • Harvest costs: The decrease in harvest costs in fiscal year 2023, compared to fiscal year 2022, was primarily due to decreased volume of avocados, oranges and specialty citrus harvested, partially offset by increased volume of lemons 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.
Lemon packing costs were $43.0 million and $36.0 million in fiscal years 2022 and 2021, respectively. The increase in fiscal year 2022 was primarily attributable to increased volume of fresh lemons packed and sold and higher average per carton costs compared to fiscal year 2021.
In fiscal years 2023 and 2022, lemon packing costs were $45.7 million and $43.0 million, respectively. The increase in fiscal year 2023 was primarily due to higher average per carton costs, partially offset by decreased volume of fresh lemons packed and sold compared to fiscal year 2022.
Selling, general and administrative expenses for fiscal year 2022 were $21.8 million compared to $19.4 million for fiscal year 2021.
Selling, general and administrative expenses for fiscal year 2023 were $26.5 million compared to $21.8 million for fiscal year 2022.
During fiscal years 2022 and 2021, fresh lemon sales were $92.9 million and $85.9 million on 4.9 million and 4.4 million cartons of fresh lemons packed and sold at average per carton prices of $18.77 and $19.60, respectively.
During fiscal years 2023 and 2022, fresh lemon sales were $86.8 million and $92.9 million, in aggregate, on 4.8 million and 4.9 million cartons of lemons sold at average per carton prices of $18.24 and $18.77, 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.
Income Taxes In fiscal years 2023 and 2022 , we paid income taxes of $7.2 million and $0.1 million , 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.
See Note 10 - Long-Term Debt, Note 12 - Leases and Note 16 - Retirement Plans for amounts outstanding on October 31, 2022, related to debt, leases and the Plan. Purchase obligations consist of contracts primarily related to packing supplies and pollination services, the majority of which are due in the next three years.
See Note 11 - Long-Term Debt and Note 13 - Leases for amounts outstanding as of October 31, 2023, 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.
Costs and expenses in our corporate and other operations were approximately $20.6 million and $22.7 million in fiscal years 2022 and 2021, respectively, and include rental operations costs, selling, general and administrative expenses not allocated to the operating segments, and (gain) loss on disposal of assets. Depreciation and amortization expenses were approximately $1.2 million in fiscal years 2022 and 2021.
Costs and expenses (gain) in our corporate and other operations were $(1.3) million and $20.6 million for fiscal years 2023 and 2022, respectively, and include selling, general and administrative costs and expenses, gain on disposal of assets, net and gain on legal settlement not allocated to the operating segments.
The decrease in fiscal year 2022, compared to fiscal year 2021, reflects farm management decisions based on weather, harvest timing and crop conditions. • Third-party grower and supplier costs: We sell fruit that we grow and fruit that we procure from other growers and suppliers.
The increase in fiscal year 2023, compared to fiscal year 2022, was primarily due to the Northern Properties farm management costs which were expensed in fiscal year 2023 and were capitalized as cultural costs in fiscal year 2022, as well as farm management decisions based on weather, harvest timing and crop conditions. • 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 others is referred to as third-party grower and supplier costs. The increase in fiscal year 2022 was primarily due to increased volume of fruit procured from third-party growers and suppliers compared to fiscal year 2021.
The cost of procuring fruit from other growers and suppliers as well as the cost of brokered fruit is referred to as third-party grower and supplier costs. The increase in fiscal year 2023, compared to fiscal year 2022, was primarily due to increased costs incurred for brokered fruit, partially offset by decreased costs for third-party growers and suppliers' fruit.
The significant components of our cash flows provided by operating activities are as follows. 39 • Net loss was $0.5 million and $3.9 million for fiscal years 2022 and 2021, respectively.
Cash Flows from Operating Activities Net cash (used in) provided by operating activities was $(15.9) million and $14.8 million for fiscal years 2023 and 2022, respectively. The significant components of our cash flows (used in) provided by operating activities were as follows: • Net income (loss) was $9.1 million and $(0.5) million for fiscal years 2023 and 2022, respectively.
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.
Our liquidity and capital position fluctuates 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.
During fiscal years 2022 and 2021, of the 4.9 million and 4.4 million lemon cartons sold, 2.6 million (52%) and 2.3 million (52%) were procured from third-party growers and suppliers at average per carton prices of $13.03 and $13.83, respectively: an increase of $1.9 million. • Depreciation and amortization: Depreciation and amortization expense in fiscal year 2022 was similar compared to fiscal year 2021.
During fiscal years 2023 and 2022 of the 4.8 million and 4.9 million cartons of lemons packed and sold, 2.6 million (54%) and 2.6 million (52%), were procured from third-party growers and suppliers at average per carton prices of $12.44 and $13.03, respectively. • Depreciation and amortization: Depreciation and amortization expense for fiscal years 2023 and 2022 was $7.3 million and $8.6 million, respectively.
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 and our Farm Credit West Credit Facility, which includes the Master Loan Agreement (the "MLA"), Supplements and Revolving Equity Line of Credit (the "RELOC").
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 and from our AgWest Farm Credit Facility, which includes the Master Loan Agreement (the “MLA”) and Supplements. In addition, we have Banco de Chile term loans and COVID-19 loans.
The components of net loss in fiscal year 2022, compared to fiscal year 2021, consists of an increase in operating income of $8.5 million, an increase in total other expense of $4.0 million and an increase in income tax provision of $1.1 million. • Adjustments to reconcile net loss to net cash provided by operating activities: ◦ Adjustments provided $10.0 million of operating cash in fiscal year 2022, compared to providing $10.2 million of operating cash in fiscal year 2021, primarily due to significant changes in (gain) loss on disposal of assets, equity in earnings of investments, net, and other, net, which primarily related to pension expense and pension settlement cost. ◦ Changes in operating assets and liabilities provided $5.3 million of operating cash in fiscal year 2022, compared to providing $3.3 million of operating cash in fiscal year 2021, primarily due to significant changes in accounts receivable and receivables/other from related parties, income taxes receivable, accounts payable and growers and suppliers payable and accrued liabilities and payables to related parties.
The components of net income for fiscal year 2023, compared to net loss for fiscal year 2022, consists of an increase in operating income of $8.6 million and an increase in total other income of $4.4 million, offset by an increase in income tax provision of $3.4 million. • Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: ◦ Adjustments (used) provided $(22.5) million and $10.0 million for fiscal years 2023 and 2022, respectively, primarily related to depreciation and amortization, gain on disposal of assets, stock compensation expense, equity in earnings of investments, net and deferred income taxes. ◦ Changes in operating assets and liabilities (used in) provided by $(2.5) million and $5.3 million of operating cash for fiscal years 2023 and 2022, respectively, primarily related to cultural costs, prepaid expenses/other current assets, accounts payable/growers and suppliers payable, accrued liabilities/payables to related parties, and other long-term liabilities.
Costs and expenses associated with our other agribusiness segment include harvest, growing and brokered fruit costs. Our other agribusiness costs and expenses for fiscal year 2022 were $18.2 million compared to $9.2 million for fiscal year 2021.
Costs and expenses associated with our other agribusiness segment include growing costs, harvest costs and purchased fruit costs. Our other agribusiness costs and expenses were $22.7 million and $18.2 million for fiscal years 2023 and 2022, respectively.
We are also subject to a financial covenant that requires us to maintain compliance with a specified debt service coverage ratio greater than or equal to 1:25:1.0 on an annual basis. We were in compliance as of October 31, 2022.
We are also subject to a financial covenant that requires us to maintain compliance with a specific debt service coverage ratio on an annual basis. In September 2023, the Lender modified the covenant to defer measurement as of October 31, 2023 and resume a debt service coverage ratio of 1.25:1.0 measured as of October 31, 2024.
We expect to receive approximately $115.0 million from LLCB and LLCB II over the seven remaining years of the projects, including the $8.0 million received in fiscal year 2022. 41 Trend Information The commodity pricing for our fresh produce, and therefore our revenues and margins, is significantly impacted by consumer demand.
We expect to receive approximately $123.0 million from LLCB, LLCB II and East Area II over the next seven years of the projects. 41 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.
Segment information for fiscal year 2022 (in thousands): Fresh Lemons Lemon Packing Eliminations Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 120,885 $ 22,176 $ — $ 17,331 $ 18,889 $ 179,281 $ 5,324 $ 184,605 Intersegment revenues — 29,817 (29,817) — — — — — Total net revenues 120,885 51,993 (29,817) 17,331 18,889 179,281 5,324 184,605 Costs and expenses 115,119 43,017 (29,817) 5,524 18,204 152,047 20,559 172,606 Depreciation and amortization — — — — — 8,604 1,194 9,798 Operating income (loss) $ 5,766 $ 8,976 $ — $ 11,807 $ 685 $ 18,630 $ (16,429) $ 2,201 Segment information for fiscal year 2021 (in thousands): Fresh Lemons Lemon Packing Eliminations Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 125,448 $ 17,514 $ — $ 6,784 $ 11,635 $ 161,381 $ 4,646 $ 166,027 Intersegment revenues — 25,637 (25,637) — — — — — Total net revenues 125,448 43,151 (25,637) 6,784 11,635 161,381 4,646 166,027 Costs and expenses 116,117 36,018 (25,637) 4,211 9,157 139,866 22,682 162,548 Depreciation and amortization — — — — — 8,626 1,186 9,812 Operating (loss) income $ 9,331 $ 7,133 $ — $ 2,573 $ 2,478 $ 12,889 $ (19,222) $ (6,333) 37 Fiscal Year 2022 Segment Information Compared to Fiscal Year 2021 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, lemon by-products, brokered fruit and other lemon revenue.
See Note 21 - Segment Information for additional information regarding our operating segments. 37 Segment information for fiscal year 2023 (in thousands): Fresh Lemons Lemon Packing Eliminations Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 121,537 $ 20,573 $ — $ 7,046 $ 25,225 $ 174,381 $ 5,520 $ 179,901 Intersegment revenue — 31,081 (31,081) — — — — — Total net revenues 121,537 51,654 (31,081) 7,046 25,225 174,381 5,520 179,901 Costs and expenses (gain) 120,494 45,689 (31,081) 4,034 22,710 161,846 (1,304) 160,542 Depreciation and amortization — — — — — 7,323 1,253 8,576 Operating income $ 1,043 $ 5,965 $ — $ 3,012 $ 2,515 $ 5,212 $ 5,571 $ 10,783 Segment information for fiscal year 2022 (in thousands): Fresh Lemons Lemon Packing Eliminations Avocados Other Agribusiness Total Agribusiness Corporate and Other Total Revenues from external customers $ 120,885 $ 22,176 $ — $ 17,331 $ 18,889 $ 179,281 $ 5,324 $ 184,605 Intersegment revenue — 29,817 (29,817) — — — — — Total net revenues 120,885 51,993 (29,817) 17,331 18,889 179,281 5,324 184,605 Costs and expenses 115,119 43,017 (29,817) 5,524 18,204 152,047 20,559 172,606 Depreciation and amortization — — — — — 8,604 1,194 9,798 Operating income (loss) $ 5,766 $ 8,976 $ — $ 11,807 $ 685 $ 18,630 $ (16,429) $ 2,201 Fiscal Year 2023 Segment Information Compared to Fiscal Year 2022 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, lemon by-products, brokered lemons and other lemon revenue.
In June 2021, we entered into the MLA with Farm Credit West, PCA (the "Lender") dated June 1, 2021, together with the Supplements and a Fixed Interest Rate Agreement, which extends the principal repayment to July 1, 2026.
Additional information regarding these loans can be found in Note 11- Long-Term Debt. In June 2021, we entered into the MLA with the Lender, together with the Supplements and a Fixed Interest Rate Agreement, which extends the principal repayment to July 1, 2026.
In fiscal years 2022 and 2021, we packed and sold 4.9 million and 4.4 million cartons of lemons at average per carton costs of $8.69 and $8.22, respectively.
During fiscal years 2023 and 2022, we packed and sold 4.8 million and 4.9 million cartons of lemons at average per carton costs of $9.61 and $8.69, respectively. The increase in average per carton costs in fiscal year 2023, compared to fiscal year 2022, was primarily due to increased labor and benefit costs.
In fiscal years 2022 and 2021, costs for purchased, packed fruit for resale increased by $0.9 million; we incurred costs of $26.2 million and $25.2 million, respectively.
In fiscal years 2023 and 2022, we incurred costs for purchased, packed fruit for resale of $29.4 million and $26.2 million, respectively. In fiscal years 2023 and 2022, we incurred costs for third-party growers and suppliers' fruit of $31.9 million and $33.4 million, respectively.
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 2022 and 2021.
In fiscal years 2023 and 2022 we received annual patronage dividends of $1.4 million and $1.6 million, respectively, from the Lender. Dividends The holders of the Series B Convertible Preferred Stock (the “Series B Stock”) and the Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) are entitled to receive cumulative cash dividends.
Our reportable operating segments are strategic business units with different products and services, distribution processes and customer bases. We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. Each segment is subject to review and evaluations related to current market conditions, market opportunities and available resources.
Segment Results of Operations We operate in four reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness. Our reportable operating segments are strategic business units with different products and services, distribution processes and customer bases. We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results.
These costs are discussed further below ($ in thousands): Agribusiness Costs and Expenses for the Years Ended October 31, 2022 2021 Change Packing costs $ 45,448 $ 38,754 $ 6,694 17% Harvest costs 20,767 17,227 3,540 21% Growing costs 26,277 27,195 (918) (3)% Third-party grower and supplier costs 59,555 56,690 2,865 5% Depreciation and amortization 8,604 8,626 (22) —% Agribusiness costs and expenses $ 160,651 $ 148,492 $ 12,159 8% • Packing costs: Packing costs consist 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.
Agribusiness costs and expenses are detailed below (in thousands): Years Ended October 31, 2023 2022 Change Packing costs $ 48,581 $ 45,448 $ 3,133 7% Harvest costs 18,613 20,767 (2,154) (10)% Growing costs 33,379 26,277 7,102 27% Third-party grower and supplier costs 61,273 59,555 1,718 3% Depreciation and amortization 7,323 8,604 (1,281) (15)% Agribusiness costs and expenses $ 169,169 $ 160,651 $ 8,518 5% • 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 $4.0 million increase in other expenses was primarily the result of: • $0.8 million increase in interest expense, net as a result of increased interest rates; • $1.9 million decrease in equity in earnings of investments primarily from LLCB; and • $1.0 million increase in other expenses primarily from pension expense and pension settlement cost.
The $4.4 million increase in total other income was primarily due to: • $4.0 million increase of equity earnings in investments primarily due to LLCB; • $1.8 million decrease of interest expense due to decreased long-term debt; and • $1.7 million increase of other expense primarily due to pension settlement cost.
The 19% increase of $7.0 million was primarily due to increased volume of lemons packed and higher costs in labor and benefits, cardboard cartons, fruit treatments and packing and shipping supplies. Lemon packing segment operating income per carton sold was $1.81 and $1.63 for fiscal years 2022 and 2021, respectively.
The 6% increase of $2.7 million was primarily due to increased labor and benefit costs. 38 Lemon packing segment operating income per carton sold was $1.25 and $1.81 for fiscal years 2023 and 2022, respectively.
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.
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. 39 Material contractual obligations arising in the normal course of business consist primarily of purchase obligations, long-term fixed rate and variable rate debt and related interest payments and operating and finance leases.
Our effective tax rate for fiscal years 2022 and 2021 was 234.8% and 6.4%, respectively. Loss Attributable to Noncontrolling Interest Loss attributable to noncontrolling interest primarily represents 10% and 49% of the net losses of PDA and Trapani Fresh, respectively. Segment Results of Operations We operate in four reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness.
Our effective tax rate for fiscal years 2023 and 2022 was 31.8% and 234.8%, respectively. Net Loss Attributable to Noncontrolling Interest Net loss attributable to noncontrolling interest represents 10% and 49% of the net loss of PDA and Trapani Fresh, respectively, for fiscal years 2023 and 2022.
The 1% decrease of $1.0 million primarily consisted of the following: • Harvest costs for fiscal year 2022 were $2.9 million higher than fiscal year 2021; • Growing costs for fiscal year 2022 were $2.2 million lower than fiscal year 2021; • Third-party grower and supplier costs for fiscal year 2022 were $5.6 million lower than fiscal year 2021; • Transportation costs for fiscal year 2022 were $0.3 million lower than fiscal year 2021; and • Intersegment costs and expenses for fiscal year 2022 were $4.2 million higher than fiscal year 2021.
The 5% increase of $5.4 million was primarily due to: • Harvest costs increase of $0.3 million; • Growing costs increase of $3.2 million; • Third-party grower and supplier costs increase of $0.1 million; • Transportation costs increase of $0.5 million; and • Intersegment costs and expenses increase of $1.3 million.
The MLA governs the terms of the Supplements. 40 The Supplements and RELOC provide aggregate borrowing capacity of $130.0 million comprised of $75.0 million under the Revolving Credit Supplement, $40.0 million under the Non-Revolving Credit Supplement and $15.0 million under the RELOC.
The MLA governs the terms of the Supplements. 40 The Supplements provide aggregate borrowing capacity of $115.0 million, comprised of $75.0 million under the Revolving Credit Supplement and $40.0 million under the Non-Revolving Credit Supplement. As of October 31, 2023, our outstanding borrowings under the AgWest Farm Credit Facility were $40.0 million and we had $75.0 million of availability.
Cash Flows from Financing Activities For the years ended October 31, 2022 and 2021, net cash (used in) provided by financing activities was $(33.5) million and $0.5 million, respectively. • The $(33.5) million of cash used in financing activities for fiscal year 2022 was primarily comprised of net repayments of long-term debt in the amount of $26.8 million.
Cash Flows from Financing Activities • The $71.9 million of net cash used in financing activities during fiscal year 2023 was comprised primarily of net repayments of long-term debt $65.0 million and common and preferred stock dividends of $5.9 million. • The $33.5 million of net cash used in financing activities during fiscal year 2022 was comprised primarily of net repayments of long-term debt of $26.8 million, common and preferred stock dividends of $5.8 million and the exchange of common stock of $1.5 million, partially offset by proceeds from equipment financings of $1.0 million.
Other (Expense) Income Other (expense) income, for fiscal year 2022 was $(1.9) million compared to $2.2 million for fiscal year 2021.
Other Income (Expense) Total other income (expense) was $2.6 million and $(1.9) million for fiscal years 2023 and 2022, respectively.
The 11% increase of $18.6 million was primarily the result of increased avocados, oranges and specialty citrus and other crops agribusiness revenues, as detailed below ($ in thousands): Agribusiness Revenues for the Years Ended October 31, 2022 2021 Change Lemons $ 143,061 $ 142,962 $ 99 —% Avocados 17,331 6,784 10,547 155% Oranges 9,911 4,382 5,529 126% Specialty citrus and other crops 8,978 7,253 1,725 24% Agribusiness revenues $ 179,281 $ 161,381 $ 17,900 11% • Lemons: Lemon revenues in fiscal year 2022 were similar to fiscal year 2021.
The 3% decrease of $4.7 million was primarily due to decreased avocados and oranges agribusiness revenues, partially offset by farm management agribusiness revenues, as detailed below (in thousands): Years Ended October 31, 2023 2022 Change Lemons $ 142,110 $ 143,061 $ (951) (1)% Avocados 7,046 17,331 (10,285) (59)% Oranges 5,779 9,911 (4,132) (42)% Specialty citrus and other crops 9,515 8,978 537 6% Farm management 9,931 — 9,931 —% Agribusiness revenues $ 174,381 $ 179,281 $ (4,900) (3)% • Lemons: The decrease in fiscal year 2023, compared to fiscal year 2022, was primarily due to decreased fresh lemon sales, partially offset by increased brokered lemons and other lemon sales.
Cash Flows from Investing Activities For the years ended October 31, 2022 and 2021, net cash provided by (used in) investing activities was $19.4 million and $(10.2) million, respectively, and is primarily comprised of capital expenditures, sales of assets, collection of notes receivable and investments. • Capital expenditures for fiscal year 2022 were $10.1 million for property, plant and equipment, primarily related to orchards, and real estate development projects.
Cash Flows from Investing Activities ▪ The $90.6 million of net cash provided by investing activities during fiscal year 2023 was comprised primarily of net proceeds from sales of assets of $98.5 million, net proceeds from the sale of real estate development assets of $2.6 million, partially offset by capital expenditures of $10.3 million, primarily related to orchard and vineyard development. ▪ The $19.4 million of net cash provided by investing activities during fiscal year 2022 was comprised primarily of net proceeds from sale of assets of $19.3 million, net proceeds from the sale of real estate development assets of $7.9 million, collection on notes receivable of $2.8 million, partially offset by capital expenditures of $10.1 million related to orchard and vineyard development.
For fiscal year 2022, our fresh lemon costs and expenses were $115.1 million compared to $116.1 million for fiscal year 2021.
For fiscal years 2023 and 2022, our fresh lemons segment costs and expenses were $120.5 million and $115.1 million, respectively.
Lemon revenues in fiscal years 2022 and 2021 included brokered fruit and other lemon sales of $24.5 million and $36.0 million, respectively, shipping and handling of $22.2 million and $17.5 million, respectively, and lemon by-products of $3.5 million in both fiscal years. • Avocados: The increase in fiscal year 2022 was primarily the result of increased volume and higher prices of avocados sold compared to fiscal year 2021.
Lemon revenues in fiscal years 2023 and 2022 included brokered lemons and other lemon sales of $30.3 million and $24.5 million, shipping and handling of $20.6 million and $22.2 million, and lemon by-product sales of $3.0 million and $3.5 million, respectively.
Total agribusiness depreciation and amortization for fiscal years 2022 and 2021 was $8.6 million. Corporate and Other Our corporate and other operations had rental revenues of approximately $5.3 million and $4.6 million in fiscal years 2022 and 2021, respectively.
Corporate and Other Our corporate and other operations revenues were $5.5 million and $5.3 million for fiscal years 2023 and 2022, respectively.
The 99% increase of $9.0 million primarily consisted of the following: • Harvest costs for fiscal year 2022 were $0.4 million lower than fiscal year 2021; • Growing costs for fiscal year 2022 were $0.9 million higher than fiscal year 2021; and • Brokered fruit costs for fiscal year 2022 were $8.5 million higher than fiscal year 2021.
Our avocados segment costs and expenses were $4.0 million and $5.5 million for fiscal years 2023 and 2022, respectively. The 27% decrease of $1.5 million primarily consisted of the following: • Harvest costs decrease of $0.9 million; and • Growing costs decrease of $0.6 million.
Other operations expenses for fiscal years 2022 and 2021 were $4.4 million and $4.3 million, respectively. (Gain) loss on disposal of assets for fiscal years 2022 and 2021 were $(4.5) million and $0.1 million, respectively. The change is primarily due to sales of East Area I Retained Property and Oxnard Lemon packing facility in fiscal year 2022.
The decrease in fiscal year 2023, compared to fiscal year 2022, was primarily due to the Northern Properties sale in fiscal year 2023. 36 Other operations expenses for fiscal years 2023 and 2022 were $4.6 million and $4.4 million, respectively. Gain on disposal of assets, net in fiscal years 2023 and 2022 were $28.8 million and $4.5 million, respectively.
Orange revenues in fiscal year 2022 included brokered fruit sales of $5.0 million, compared to immaterial brokered fruit sales in fiscal year 2021, sold at average per carton prices of $14.66 and $8.04, respectively. • Specialty citrus and other crops: The increase in fiscal year 2022 was primarily due to increased brokered fruit sales and higher prices of specialty citrus sold compared to fiscal year 2021.
During fiscal years 2023 and 2022, 292,000 and 676,000 cartons of oranges were sold at an average per carton price of $19.79 and $14.66, respectively. 35 • Specialty citrus and other crops: The increase in fiscal year 2023, compared to fiscal year 2022, was primarily due to higher prices, partially offset by decreased volume of specialty citrus sold.
Liquidity and Capital Resources Overview Our primary sources of liquidity are cash and cash flows generated from our operations and use of our revolving credit facility. Our liquidity and capital position fluctuates during the year depending on seasonal production cycles, weather events and demand for our products.
Depreciation and amortization expenses for fiscal years 2023 and 2022 were $1.3 million and $1.2 million, respectively. Liquidity and Capital Resources Overview Our primary sources of liquidity are cash and cash flows generated from our operations and use of our revolving credit facility.
Avocados For fiscal year 2022, our avocados segment revenue was $17.3 million compared to $6.8 million for fiscal year 2021, a 155% increase of $10.5 million. Cost and expenses associated with our avocados segment include harvest costs and growing costs. For fiscal year 2022, our avocado costs and expenses were $5.5 million compared to $4.2 million for fiscal year 2021.
Avocados Our avocados segment revenues were $7.0 million and $17.3 million for fiscal years 2023 and 2022, respectively, a 59% decrease of $10.3 million, due primarily to alternating years of high and low production due to plant physiology. Costs and expenses associated with our avocados segment include growing and harvest costs.
The $2.4 million increase was primarily the result of: • $1.0 million increase in salaries, benefits and incentive compensation; • $0.8 million increase in named executive officer severance; • $0.4 million increase in selling expenses; and 36 • $0.2 million increase in other selling, general and administrative expenses, including certain corporate overhead expenses.
The $4.7 million increase was primarily due to: • $2.5 million net increase in salaries, benefits and incentive compensation; • $0.7 million increase in tax, legal and consulting fees primarily related to disposals of Northern Properties and Cadiz; • $0.2 million increase in selling expenses; and • $1.3 million net increase in other selling, general and administrative expenses, primarily associated with our strategic initiatives.
The 62% increase of $7.3 million primarily consisted of the following: 38 • Orange revenue for fiscal year 2022 was $5.5 million higher than fiscal year 2021; and • Specialty citrus and other crop revenue for fiscal year 2022 was $1.7 million higher than fiscal year 2021.
The 34% increase of $6.3 million was primarily due to: • Orange revenues decrease of $4.1 million; • Specialty citrus and other revenues increase of $0.5 million; and • Farm management revenues in fiscal year 2023 were $9.9 million. There were no farm management revenues in fiscal year 2022.
In addition, we have the ability to control a portion of our investing cash flows to the extent necessary based on our liquidity demands. Cash Flows from Operating Activities For the fiscal years ended October 31, 2022 and 2021, net cash provided by operating activities was $14.8 million and $9.6 million, respectively.
We believe our revenue generating operations, distributions from equity investments and credit facilities will generate sufficient cash needed to operate beyond the next twelve months. In addition, we have the ability to control a portion of our investing cash flows to the extent necessary based on our liquidity demands.
Lemon Packing Lemon packing segment revenue is comprised of intersegment packing revenue and shipping and handling revenue. For fiscal year 2022, our lemon packing segment revenue was $52.0 million compared to $43.2 million for fiscal year 2021. The 20% increase of $8.8 million was primarily due to increased volume of lemons packed.
Lemon Packing Lemon packing segment revenue is comprised of packing revenue, intersegment packing revenue and shipping and handling revenue. For fiscal years 2023 and 2022, our lemon packing segment total net revenues were $51.7 million and $52.0 million, respectively, a 1% decrease of $0.3 million.
Other Agribusiness For fiscal year 2022, our other agribusiness segment revenue was $18.9 million compared to $11.6 million for fiscal year 2021.
Other Agribusiness Our other agribusiness segment total net revenues were $25.2 million and $18.9 million for fiscal years 2023 and 2022, respectively.
Higher prices in fiscal year 2022 were primarily related to lower supply of fruit in the marketplace. • Oranges: The increase in fiscal year 2022 was primarily due to increased brokered fruit sales and higher prices compared to fiscal year 2021.
Other operations revenue in fiscal years 2023 and 2022 was $5.5 million and $5.3 million, respectively. The increase in fiscal year 2023, compared to fiscal year 2022, was primarily due to increased leased land revenue.
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("Calavo"), named executive officer cash severance, pension settlement cost and (gain) loss on disposal of assets, is an important measure to evaluate our results of operations between periods on a more comparable basis.
Added
In addition, lemon revenues included settlement proceeds of $1.4 million allocated to lemons in fiscal year 2023. • Avocados: The decrease in fiscal year 2023, compared to fiscal year 2022 was primarily due to decreased volume and lower prices of avocados sold.
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Specialty citrus revenues in fiscal year 2022 included brokered fruit sales of $2.9 million, compared to immaterial brokered fruit sales in 2021, sold at an average per carton price of $13.22 and $11.20, respectively. 35 Other operations revenue in fiscal year 2022 and 2021 was $5.3 million and $4.6 million, respectively.
Added
In addition, avocado revenues included settlement proceeds of $2.4 million allocated to avocados and crop insurance proceeds of $0.7 million in fiscal year 2023. • Oranges: The decrease in fiscal year 2023, compared to fiscal year 2022, was primarily due to decreased volume, mainly related to the Northern Properties sale.
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Costs and Expenses Total costs and expenses for fiscal year 2022 were $182.4 million compared to $172.4 million for fiscal year 2021. This 6% increase of $10.0 million was primarily attributable to increases in our agribusiness costs and selling, general and administrative expenses, partially offset by an increase in gain on disposal of assets.
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During fiscal years 2023 and 2022, we sold 240,000 and 434,000 40-pound carton equivalents of specialty citrus at an average per carton price of $27.18 and $13.22, respectively.
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Costs associated with our agribusiness division include packing costs, harvest costs, growing costs, costs related to the lemons we procure from third-party growers and suppliers and depreciation and amortization expense.
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Additionally, during fiscal years 2023 and 2022, we sold $2.9 million and $3.2 million of wine grapes, respectively. • Farm management: Farm management revenues in fiscal year 2023 were $9.9 million, primarily due to the Northern Properties farming, management and operations services. There were no farm management revenues in fiscal year 2022.
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The increase in average per carton costs in fiscal year 2022, compared to fiscal year 2021, was primarily due to higher costs in labor and benefits, fruit treatments, cardboard cartons and packing and shipping supplies.
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Costs and Expenses Our total costs and expenses in fiscal year 2023 were $169.1 million, compared to $182.4 million in the same period of fiscal year 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAdditionally, a 100 basis points increase in the interest rate would decrease our net income by $0.4 million for fiscal year 2023 and an annual average of $0.5 million for the three subsequent fiscal years. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for additional information. 44
Biggest changeRefer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for additional information.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk Borrowings under the Farm Credit West Credit Facility and Farm Credit West Term Loans are or will be subject to variable interest rates. These variable interest rates subject us to the risk of increased interest costs associated with any upward movements in interest rates.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest Rate Risk Borrowings under the AgWest Farm Credit Facility are subject to variable interest rates. These variable interest rates subject us to the risk of increased interest costs associated with any upward movements in interest rates.
Based on our level of borrowings at October 31, 2022, a 100 basis points increase in interest rates would increase our interest expense $0.5 million for fiscal year 2023 and an annual average of $0.7 million for the three subsequent fiscal years.
Based on our level of borrowings as of October 31, 2023, a 100 basis points increase in interest rates would not materially increase our interest expense for fiscal year 2024 or the three subsequent fiscal years.
For the Farm Credit West Credit Facility and Farm Credit West Term Loans, our borrowing interest rate is an internally calculated rate based on Farm Credit West’s internal monthly operations and their cost of funds and generally follows the changes in the 90-day treasury rates in increments divisible by 0.25%.
For the AgWest Farm Credit Facility, our borrowing interest rate is an internally calculated rate based on an AgWest Farm Credit internal method that follows the changing market interest rates and the cost to fund variable-rate loans.
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At October 31, 2022, our total debt outstanding under the Farm Credit West Credit Facility and the Farm Credit West Term Loans was $88.5 million and $16.0 million, respectively.
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Rate changes are expected to be generally the same as the Federal Open Market Committee (the “FOMC”) recommended changes, however the changes may be marginally different than the FOMC's recommendation. As of October 31, 2023, our total debt outstanding under the AgWest Farm Credit Facility was $40.0 million.
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Additionally, a 100 basis points increase in the interest rate would not materially decrease our net income for fiscal year 2024 or the three subsequent fiscal years. We have strategies in place to manage our exposure to interest rate risk, including the potential early pay down of outstanding debt under the AgWest Farm Credit Facility.

Other LMNR 10-K year-over-year comparisons