Limoneira Co . (NASDAQ:LMNR) reported its fourth-quarter 2024 earnings, revealing a slight miss on earnings per share (EPS) expectations, with actual EPS at -$0.15 against a forecast of -$0.14. Despite achieving record revenue of $43.9 million, the company's stock fell 2.85% in aftermarket trading, closing at $25.55.
Key Takeaways
- Revenue reached a record $191.5 million, up 6% year-over-year.
- Adjusted EBITDA improved significantly to $26.7 million from a loss last year.
- EPS missed forecasts by $0.01, leading to a slight decline in stock price.
- Strategic shift towards avocado production aims to capitalize on market demand.
- Market reaction was slightly negative, with shares dropping in aftermarket trading.
Company Performance
Limoneira demonstrated strong revenue growth, with full-year net revenue increasing by 6% to $191.5 million, marking a new record for the company. The shift towards avocados appears promising, as the company expands its production capabilities. However, the slight EPS miss against analyst expectations may have tempered investor enthusiasm.
Financial Highlights
- Revenue: $43.9 million for Q4, up 6% year-over-year.
- Earnings per share: -$0.15, compared to -$0.20 in the previous year.
- Adjusted EBITDA: $26.7 million, a significant improvement from a loss of $224,000 last year.
Earnings vs. Forecast
Limoneira's actual EPS of -$0.15 fell short of the forecasted -$0.14, missing by $0.01. This minor miss contrasts with previous quarters where the company had larger deviations, indicating a relatively stable performance trend.
Market Reaction
Following the earnings release, Limoneira's stock declined by 2.85% in aftermarket trading, closing at $25.55. This movement is notable given the stock's previous close at $26.30 and reflects a slightly negative investor sentiment despite revenue growth.
Company Outlook
Looking forward, Limoneira plans to continue its strategic shift towards avocado production, with expectations to produce 7-8 million pounds of avocados in fiscal year 2025. The company is also exploring water monetization opportunities and anticipates significant real estate development proceeds over the next seven years.
Executive Commentary
Mark Palamounten, CFO, expressed confidence in the company's long-term goals, stating, "We expect £30 million by 2029 as sort of your baseline average." CEO Harold Edwards emphasized a commitment to maximizing stockholder value, noting, "We remain committed to thoroughly exploring all options to maximize stockholder value."
Q&A
During the earnings call, analysts focused on the company's water rights monetization strategy and the potential impact on future earnings. There was also interest in the performance of Limoneira's real estate joint ventures and the strategic shift towards avocados.
Risks and Challenges
- Execution risks associated with the shift from lemons to avocados.
- Potential volatility in avocado prices, despite market growth predictions.
- Dependence on successful water monetization and real estate ventures.
- Macro-economic pressures that could impact consumer demand and pricing.
- Supply chain challenges that may affect production and distribution efficiency.
Full transcript - Limoneira Co (LMNR) Q4 2024:
Conference Operator: Greetings, and welcome to the Limoneira's 4th Quarter Fiscal Year 20 24 Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Mills with ICR.
Thank you. You may begin.
John Mills, Investor Relations, ICR: Good afternoon, everyone, and thank you for joining us for Limoneira's Q4 fiscal year 2024 conference call. On the call are Harold Edwards, President and Chief Executive Officer and Mark Palamounten, Executive Vice President and Chief Financial Officer. By now, everyone should have access to the Q4 fiscal year 2024 earnings release, which went out today at approximately 4 p. M. Eastern Time.
If you have not had a chance to review the release, it's available on the Investor Relations portion of the company's website at limoneira.com. This call is being webcast and a replay will be available on Limoneira's website as well. Before we begin, we'd like to remind everyone that prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control and could cause its future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward looking statements. Important factors that could cause or contribute to such differences, including risks detailed in the company's Form 10 Qs and 10 ks filed with the SEC and those mentioned in the earnings release.
Except as required by law, we undertake no obligation to update any forward looking other statements herein, whether as a result of new information, future events or otherwise. Please note that during today's call, we will be discussing non GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Limoneira's ongoing results of operations, particularly when comparing underlying results from period to period. We have provided as much detail as possible on any items that are discussed on an adjusted basis. Also within the company's earnings release and in today's prepared remarks, we included adjusted EBITDA and adjusted diluted earnings per share, which are non GAAP financial measures.
A reconciliation of adjusted EBITDA and adjusted diluted EPS to the most directly comparable GAAP financial measures are included in the company's press release, which has been posted to its website. And with that, it is my pleasure to turn the call over to the company's President and CEO, Mr. Harold Edwards.
Harold Edwards, President and Chief Executive Officer, Limoneira: Thanks, John, and good afternoon, everyone. We are extremely pleased with our Q4 and full fiscal year 2024 results. For the full year, net revenue grew 6% to a record $191,500,000 and adjusted EBITDA was $26,700,000 compared to a loss of $224,000 for fiscal year 2023. We achieved avocado and lemon volume guidance for the year. In fact, the £15,100,000 of avocados sold in fiscal year 2020 4 was the most volume sold in almost 15 years.
These overall results demonstrate the strength of our agricultural platform and validate our strategic decision to expand our avocado production by 1,000 acres through fiscal year 2027, which is expected to drive significant EBITDA growth. In addition, our lemon offering is achieving increased penetration in the food service and quick service restaurant channels, and we expect more meaningful market penetration in fiscal year 2025. Our agricultural success combined with a compelling portfolio of real estate assets, valuable water resources and a strong balance sheet create multiple potential pathways to build lasting stockholder value. As an example, our residential joint venture with the Lewis (JO:LEWJ) Group of Companies for the Harvest Real Estate Development project continues to perform very well, and we anticipate meaningful water monetization transactions in fiscal year 2025. In addition, we continue to explore strategic alternatives for our assets and are very pleased with the interest.
We remain committed to thoroughly exploring all options to maximize stockholder value and will provide updates if the Board of Directors find that further disclosure is necessary or advisable. In fiscal year 2024, we achieved 2 significant real estate milestones. 1st, in April, our joint venture with Lewis closed on lot sales representing 554 residential units, thus completing the sellout of Phase 2 of the development. A total of 1261 residential units have closed from the project's inception. 2nd, in May, we announced the Santa Paula City Council approved the joint venture proposal to increase the total number of residential units for the project from 1500 to 2,050 units.
The 5.50 unit increase will provide 250 additional single family for sale home sites within Phase 3 of harvest. A separate joint venture with Lewis plans to construct 300 multifamily rental homes on a mixed use portion of the project. This is a 37% increase in dwelling units, unlocking further value creation opportunities. Based on these events and the expected continued increase in land value associated with this project, we increased our cash flow projections by 46% in June and expect to receive $180,000,000 in total proceeds spread out over 7 fiscal years with $15,000,000 received this year. In addition, in December of 2024, we received approval from the Federal Emergency Management Agency or FEMA to revise a flood zone map area effective May 15, 2025 that significantly reduces the number of property owners that are required to pay flood insurance within East Area 1, East Area 2 and other real estate within the flood zone area west of Santa Paula Creek.
Within East Area 1, approximately 1100 existing and future residents will not be subject to mandatory flood insurance due to the revised flood zone map. It has been a time of intensive process as we have been working with various public agencies since 2020 to correct the FEMA flood zone insurance rate map. Revising the flood zone map is expected to improve future interest in residential and commercial real estate in these zones as it removes the concern of flooding and the cost of mandatory flood insurance. Turning to our balance sheet, our net debt as of October 31, 2024 was $37,600,000 Additionally, our fifty-fifty real estate development joint venture had 66 $900,000 of cash and cash equivalents as of October 31, 2024, of which 50% is approximately $33,500,000 The joint venture currently has no debt. We consider this approximately $33,500,000 as an offset to our net debt position of $37,600,000 Now to provide a quick update on our decision to evaluate strategic alternatives for the overall business.
Today, we consider ourselves to be a very strong financial position, having recently reduced our net debt position and rightsized the balance sheet through our ongoing strategic shift towards an asset lighter business model and with stronger cash flow projections from harvest at Limoneira. Since announcing our exploration of strategic alternatives, we have received significant interest and are diligently working with our advisors to evaluate these potential opportunities. We remain committed to thoroughly exploring all options to maximize stockholder value and will provide updates if the Board of Directors find that further disclosure is necessary or advisable. Even after the recent non strategic asset sales over the past year and a half, we continue to manage approximately 10,500 acres of land with approximately 21,000 acre feet of owned water. Usage and pumping rights represented tremendous long term value growth opportunities from our assets.
You can see by our improvement in agribusiness operating income during the Q4 full year, our transition to an asset lighter business model and focus on the best use of our assets to enhance stockholder value is having a positive effect. We removed our pension obligation, achieved our significantly increased volume guidance for fiscal year 2024 and are monetizing water through a following program with the Yuma Mesa Irrigation and Drainage Ditch. And with that, I'll now turn the call over to Mark.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Thank you, Harold, and good afternoon, everyone. To best gauge our performance, we encourage viewing our business on an annual basis given our natural seasonality with Q2 and Q3 historically stronger and Q1 and Q4 more moderate. For the Q4 of fiscal year 2024, total net revenue increased 6% to $43,900,000 compared to total net revenue of $41,400,000 in the Q4 of the previous fiscal year. Agribusiness revenue was $42,500,000 compared to $40,100,000 in the Q4 last year. Other operations revenue was $1,400,000 in the Q4 of fiscal year 2024 compared to $1,300,000 in the Q4 last year.
Agribusiness revenue for the Q4 of fiscal year 2024 includes $8,400,000 in fresh packed lemon sales compared to $11,300,000 during the same period of fiscal year 2023. Approximately 470,000 cartons of U. S. Packed fresh lemons were sold during the Q4 of fiscal year 2024 at a $17.95 average price per carton compared to 550,000 cartons sold at a $20.39 average price per carton during the Q4 of fiscal year 2023. During the Q4 of fiscal year 2024, our lemon volume was impacted by lower fresh utilization rates due to weather driven events, coupled with a delayed start to the desert region harvest period.
Brokered lemons and other lemon sales were $14,600,000 $13,200,000 in the Q4 of fiscal years 20242023 respectively, representing 11% growth year over year. The company recognized $8,900,000 of avocado revenue in the Q4 of fiscal year 2024 compared to no avocado revenue in the Q4 of fiscal year 2023 due to the biannual nature of this fruit. Approximately £4,600,000 of avocados were sold in aggregate during the Q4 of fiscal year 2024 at a $1.92 average price per pound. The company recognized $1,700,000 of orange revenues in the Q4 of fiscal year 2024 compared to $1,900,000 in the Q4 of fiscal year 2023. Approximately 91,000 cartons of oranges were sold during the Q4 of fiscal year 2024 at an average of $18.99 price per carton compared to approximately 69,000 cartons sold at a $28.32 average price per carton during the Q4 of fiscal year 2023.
As a reminder, the company opportunistically has buy sell arrangements for orange orders with our retail and food service customers to complement our lemon sales. Specialty citrus and other crop revenue was $3,600,000 in the Q4 of fiscal year 2024 compared to $6,500,000 in the Q4 of fiscal year 2020 3. The decrease was primarily due to decreased volume of specialty citrus sold and decreased wine grade revenue. During the 4th quarters of fiscal year 20242023, approximately 8,075,040 pound carton equivalents were sold at an average price of $42.63 and $32.64 respectively. Wine Grape revenues were $2,300,000 in the Q4 of fiscal year 2024 compared to $2,900,000 in the same period of fiscal year 2023.
Farm Management revenues were $2,900,000 in the Q4 of fiscal year 2024 compared to $3,100,000 in the same period of fiscal year 2023 on similar acreage. Total (EPA:TTEF) costs and expenses for the Q4 of fiscal year 2024 were $46,600,000 compared to $51,100,000 in the Q4 of last year. Operating loss for the Q4 of fiscal year 2024 was $2,800,000 compared to an operating loss of $9,700,000 in the Q4 of the previous fiscal year. Net loss applicable to common stock after preferred dividends for the Q4 of fiscal year 2024 was $2,000,000 compared to a net loss applicable to common stock of $3,600,000 in the Q4 of fiscal year 2023. Net loss per diluted share for the Q4 of fiscal year 2024 was $0.11 compared to a net loss per diluted share of $0.20 for the same period of fiscal year 2023.
Adjusted net loss for diluted earnings per share for the Q4 of fiscal year 2024 was $1,600,000 compared to $2,600,000 in the same period of fiscal year 2023. Adjusted net loss per diluted share for the Q4 of fiscal year 2024 was 0 point 0 $9 compared to adjusted net loss per diluted share of $0.15 for the Q4 of fiscal year 2023. A reconciliation of net loss or income attributable to Limoneira Company to adjusted net loss or income for diluted earnings per share is provided at the end of our earnings release. Adjusted EBITDA for the Q4 of fiscal year 2024 was $1,200,000 compared to a loss of $1,300,000 in the same period of fiscal year 2023. A reconciliation of net loss or income attributable to Limoneira Company to adjusted EBITDA is also provided at the end of our earnings release.
For the fiscal year ended October 31, 2024, total net revenue was $191,500,000 compared to $179,900,000 last year, primarily driven by record avocado sales. Operating loss for fiscal year 2024 was $6,200,000 compared to operating income of $10,800,000 last year, primarily due to the net gain on disposal of assets. Net income applicable to common stock after preferred dividends was $7,200,000 for fiscal year 2024 compared to $8,900,000 for fiscal year 2023. Net income per diluted share for fiscal year 2024 was $0.40 compared to net income per diluted share of $0.50 in fiscal year 2023. For fiscal year 2024, adjusted net income for diluted earnings per share was $11,000,000 compared to an adjusted net loss for diluted earnings per share of $7,600,000 for fiscal year 2023.
Adjusted net income per diluted share for fiscal year 2024 was $0.62 compared to an adjusted net loss per diluted share of $0.43 for fiscal year 2023 based on approximately $17,700,000 17,600,000 weighted average diluted common shares outstanding respectively. The effective tax rates for fiscal year 20242023 were 37.9% and 31.8 percent respectively. For fiscal year 2024, adjusted EBITDA was $26,700,000 compared to a loss of $224,000 for fiscal year 2023. Turning now to our balance sheet and liquidity. In the Q1 of last year, we sold our Northern properties, which resulted in total net proceeds of $98,400,000 The proceeds were used to pay down all of our domestic debt except the Ag West Farm Credit $40,000,000 non revolving line of credit,
Conference Operator: which has a fixed
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: interest rate of 3.57 percent until July 1, 2025. Long term debt as of October 31, 2024 was $40,000,000 compared to $40,600,000 at the end of fiscal year 2023. Debt levels as of October 31, 2024 minus $3,000,000 of cash on hand resulted in a net debt position of $37,600,000 at the end of fiscal year 2024. Our fifty-fifty real estate development joint venture had $66,900,000 of cash and cash equivalents on hand as of October 31, 2024, of which 50% or $33,500,000 is approximately Limoneira's. The joint venture currently has no debt.
We consider this approximately $33,500,000 as an offset to our net debt position of $37,600,000 Furthermore, with the closure of the additional 554 residential home sites in April, the joint venture distributed $30,000,000 in June and Limoneira received $15,000,000 in cash proceeds. This additional liquidity source from our joint venture partnership provides further financial flexibility. Now I'd like to turn the call back to Harold to discuss our fiscal year 2025 outlook and longer term growth pipelines.
Harold Edwards, President and Chief Executive Officer, Limoneira: Thanks, Mark. We expect fresh lemon volumes to be in the range of 5,000,000 to 5,500,000 cartons for fiscal year 2025 and expect avocado volumes to be in the range of £7,000,000 to £8,000,000 for fiscal year 2025. In addition, we now expect to receive total proceeds of $180,000,000 from Harvest, LLCB II and LLC and East Area II spread out over 7 fiscal years with $50,000,000 received in fiscal year 2024. Looking ahead, we continue to see a strong EBITDA outlook underpinned by plans to expand avocado production by 1,000 acres through fiscal year 2027 to capitalize on robust consumer demand trends. During this transition, the company expects fiscal year 2025 avocado volume to be lower compared to fiscal year 2024 due to the alternate bearing nature of avocado trees.
These operational results do not take into account anticipated additional gains from asset monetization. Operator, we'll now open the call to questions.
Conference Operator: Thank you. We'll now be conducting a question and answer Our first question is from Ben Kalief with Lake Street Capital Markets. Please proceed with your question.
Ben Kalief, Analyst, Lake Street Capital Markets: Thanks for taking my questions and congratulations on a really good year here. First, I have a couple of questions around the water monetization efforts. First of all, you characterized the events that you anticipate coming in fiscal 2025 as being meaningful. And I'm wondering relative to the following events, which were certainly appropriate and accretive, would you characterize those following events to have been meaningful as well? I'm just trying to get kind of a relative scale of what we can expect here in fiscal 2025?
Harold Edwards, President and Chief Executive Officer, Limoneira: Yes. So, first of all, good to talk to you, Ben. So we believe that the following program for the Colorado River will be extended for another 25 years with new terms defined in 2025, but enacted in 2026. So the new water monetization from the Colorado River water rights won't take place in 2025. We do expect there will be meaningful water monetization from the Santa Paula water basin and meaningful from a standpoint that as we have continued to create and accumulate surplus water shares in that basin, we'll be able to demonstrate some of our first transactions in that basin at meaningful values that will, I think, help us better point to the definition of the significant value that exists in those Santa Paula Basin pumping rights.
Ben Kalief, Analyst, Lake Street Capital Markets: Got it. Thank you. And Harold, can you remind us what the relative value of an acre foot of water in the Colorado River versus Santa Paula Basin is?
Harold Edwards, President and Chief Executive Officer, Limoneira: Well, they're very different. So the following program right now in on the Colorado River allows us to follow half of our productive land there. So right now we have 600 acres that are followed. The Bureau of Reclamation grants us 5.5 acre feet of water to follow per acre that we followed. And we get paid $400 an acre foot, which generates about $1,300,000 of value for us and for not taking that water there.
So that's really the economics of those interests. In the Santa Paula Basin, as we've accumulated accumulated surplus water rights in that basin, we're finding the opportunities to begin to monetize some of those rights for urban needs surrounding us. And when we announce the transaction, we'll be able to announce the terms of those sales, but they are significant and actually significantly more valuable than the Colorado River water rights.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Right.
Ben Kalief, Analyst, Lake Street Capital Markets: Okay. Very good. Thank you. We'll stay tuned for more information there. And then kind of a big picture question on this dynamic is the I'm wondering kind of the status of the regulatory environment as it pertains to these water assets.
I mean, is the are there any barriers in place today or events coming soon that you think maybe a catalyst for a monetization effort either via the Colorado River Compact or some other regulatory
Conference Operator: agency
Ben Kalief, Analyst, Lake Street Capital Markets: or state or local, anything like that
Harold Edwards, President and Chief Executive Officer, Limoneira: that we should have our ears open to? Well, I think the Department of Interior and their management arm of the Bureau of Reclamation have mandated that 1 third of the consumptive use be cut off the Colorado River. And as you've probably been reading the number the numerous states that derive benefit from the Colorado River have been sort of fighting is not the right word, but negotiating on who's going to cut what. We believe that one of the biggest needs of actual water for urban development and urban needs exists in Arizona because of the Central Arizona project, which is all the housing from Scottsdale and Phoenix all the way down to Tucson, but also Lake Mead, which is a primary feeder of Las Vegas and its water. We believe that that water will be necessary to divert from agricultural uses at some level anyways into meeting the urban demands and needs.
And so therefore, we believe that our Class III Colorado River rights will be in perfect position to take advantage of those following programs. So and that new 25 year accord needs to be set and begun on the river beginning in 2026. So we believe that as administrations change right now, there'll be a big focus on putting that next 25 year accord onto the Colorado River. And I would keep our eye to your question on those negotiations and the deal that's actually cut on the river that's going to add up to a third of the consumptive use being cut.
Ben Kalief, Analyst, Lake Street Capital Markets: Got it. Very good. A lot going on here. We'll stay tuned for more news there. One question for me on the agribusiness front and then we'll get back in queue is around the fresh lemon targets here for 2025.
So you're targeting $5,000,000 to $5,500,000 cartons, which nice 10% or so step up from where you were this year, but I think that was on lower utilization. So can you talk about what is embedded in that $5,500,000 to $5,500,000 in terms of the an improvement in the utilization rate, more volume coming in from 3rd party growers, Any other big drivers here to get to that $5,000,000 to $5,500,000 excuse me, dollars 1,000,000 carton figure?
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Yes, you bet, Ben. Nice talking to you.
Harold Edwards, President and Chief Executive Officer, Limoneira: So a couple of things.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: So as we finished this year, we had all of mother nature's normal challenges that we from heat in the wrong times to cold in the wrong times to wind. And so our fresh utilization was hovering near or at 70% for the year. And so when we get down to those levels, our unit costs obviously go up. You're only selling 7 out of every 10 lemons. And so as we look at this year and we mentioned our penetration into more quick service restaurants and food service restaurants, it gives us an opportunity to sell that standard lemon a little bit easier, which does two things.
It helps fresh utilization. So if we can get up into the 80% range by selling more quick serve, It'll bring down our average overall price, but our gross net dollars back to the grower and ourselves is goes up. And so that's what we're seeing. We're gaining most of our volume through recruiting. We've recruited about over 500,000 cartons so far this year.
And as you know, we have our pivot from avocados or excuse me, lemons into avocados and are planting 1,000 acres of avocado. So some of our lemons will be coming out over time, but the goal is still to get somewhere between 20% 25% of our own fruit owned and then the balance of those 5,000,000 to 5,500,000 cartons will be outside growers.
Ben Kalief, Analyst, Lake Street Capital Markets: Got it. Got it. Very good. All right. Well, I appreciate you guys taking my questions.
That does it for me. I'll get back in queue.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Thanks, Ben. Great. Thank you.
Conference Operator: Thank you. Our next question is from Gerard Sweeney with ROTH Capital Partners (WA:CPAP). Please proceed with your question.
Gerard Sweeney, Analyst, ROTH Capital Partners: Harold and Mark, thanks for taking my call.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Hey, Gerry. Hi, Gerry.
Gerard Sweeney, Analyst, ROTH Capital Partners: Ben asked a couple of my questions, which was great, but I wanted to touch on avocados, right? So obviously, the underlying theme here is shift from more lemons, less lemons, more avocados, and you highlighted, I think, 1,000 additional acres. Could you give us a little bit more details? I know that this is going to be a multiyear process, but how those avocados come into play? And maybe if you're in a position to do so, it's sort of the economics behind that shift.
Harold Edwards, President and Chief Executive Officer, Limoneira: So let me take a stab and then Mark can fill in the rest. So if you look back at our tremendous results of over £15,000,000 produced and sold in fiscal year 2024, we did that on 800 acres that we're bearing. But as of right now, we have a little over 1300 acres planted. And so what you'll see is over the course of the next 2 to 3 years, the balance of another 700 acres being planted. Part of that comes from being able to get the nursery stock and enough trees to actually accomplish that.
The great news is that we've got them, we've got them on order, they're being produced. So that's less of a concern. As it relates to the economics now, you're going to see, even though we mentioned the alternate bearing nature of production, we just guided from £7,000,000 to £8,000,000 in fiscal year 2025. We've done that trying to be conservative. Part of what drives a crop is not only the number of pieces, but also how much size you can get, which the bigger the fruit, the heavier the amount of pounds that you get to sell.
A lot of that is driven by rainfall and we're sitting here towards the end of December have not had a lot of rain so far. It's too early to say whether that sizing will actually take place or not, But we've tried to guide being conservative that we wouldn't necessarily get the growth in the pieces that are hanging on the tree that we got last year. If we do, then you'll see considerably more avocado volume achieved. But we're again trying to be conservative as we make that guidance. As we look forward, we expect that next year should be a or 2026 would be a bigger crop year, but also on the existing acres, but seeing some of the non bearing acres that have been planted beginning to produce fruit.
And as we look forward, and I'll turn it over to Mark, maybe he can give us a look at what he would expect the volume to be. But before I do that, we've also in our forecast, just so you know, we've used an average price per pound in our models of $1.30 a pound. There are tailwinds that are going with us at this point that could allow us to achieve significantly greater pricing than that. But again, in an attempt to be conservative, we used $1.30 So if you're building a model, that's kind of where you see our forecast. But I'll turn it over to Mark and he can make his comments.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Yes. So if we think about the cadence, so we're 2 years into the call it 4 to 5 year replanting process. So as Harold mentioned, we're almost 1400 acres in the ground of which 750 are bearing at this point. And that replanting started about 2 years ago. So we think anywhere from 3 to 4 years is when you first start getting your real commercial fruit and then 6 to 7 years is full bearing.
You look at some of the trees we planted right now and some of our neighbor growers have even commented on how well they've grown already. We've got them a little bit bigger out of the nursery it seems. And so we're really anticipating sooner than 4 years of seeing our first crop. And so if we look at what we've done compared to historical plantings, we're planting higher density trees, different more robust rootstocks and also implementing technology to be able to best feed and water our trees when they need it, not just when we have the ability to serve. And so all of those contributing factors are going to take our average pounds per acre, where historically we were anywhere from £7,000 to £15,000 an acre.
Now we think we'll produce between £15,000 and £20,000 an acre between the on and off year. So quite a significant increase in production. And if you do the math, it costs us about $5,000 an acre currently to farm it. And at $20,000 an acre at $1.30 you're making over $20,000 per acre back to the farm. So quite different than where lemons are today at anywhere from $2,000 to $5,000 just depending on where the location is.
So that's why we're really confident and this year validated that strategy change.
Gerard Sweeney, Analyst, ROTH Capital Partners: Got it. And just a lot of numbers there. This year, 2025, not much change in avocado pounds, One, because what Harold talked about the rain, but the non bearing acre should start to come into play a little bit in 2026, more in 20 27 and more in 20 28. Is that sort of Yes.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: So you can kind of go equally. So on our way to £30,000,000 is sort of is the target goal. As an average, once we have 2,000 acres in, you'll see some years that have £40,000,000 and you'll see some years that have £25,000,000 So we think £30,000,000 by 2029 is a good number to have as sort of your baseline average and then assume price from there.
Gerard Sweeney, Analyst, ROTH Capital Partners: £30,000,000 got it. And I mean, but it was did you say $15,000 an acre for avocados on
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: average? It's $5,000 for us to farm it and it's $15,000 to $20,000 of operating profit per acre when we get to those levels.
Gerard Sweeney, Analyst, ROTH Capital Partners: Very, very compelling. How does that compare to lemons?
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: So lemons, so if you go back to the 2018 days, we got up to about $10,000 per acre, with a lot more noise and effort. Avocados, just depending on we have Mexico who's the 10,000 pound gorilla down there that they produce about 90% of what the U. S. Consumes. As we see comments on tariffs, deforestation and potential other cartel type issues.
The U. S. And California avocado, which is where all avocados or most avocados are produced in the U. S. Has a distinct market advantage because 70% of avocados are consumed west of the Rockies and primarily a lot of the Latin influence.
And so I think we feel really comfortable with pricing at $1.30 to be conservative. You saw Mission Produce come out with their earnings last week that they see pricing to be up 20% year over year. So all things point up for avocados at this point.
Gerard Sweeney, Analyst, ROTH Capital Partners: Got it. Shifting gears, real estate JV, I think the last distribution was in June of this past year. Two questions on them. 1, do you know when the next distribution will be? I mean, is it generally speaking June, the timeframe they look at it?
And 2, I know you said there's $30 some 1,000,000 in there, no debt. But what about the CapEx side or inflows, outflows on that number? I know it's going to grow over time, but
Conference Operator: I'm just curious as to
Harold Edwards, President and Chief Executive Officer, Limoneira: Yes. So let me just take a swing at that, Jerry. So the one thing that happened is when we made our distributions, we actually terminated the revolving line of credit that the partnership had because we're now in position to self fund our working capital and our CapEx. And so we do have some CapEx items. The next big one is we're about to build a bridge across Santa Paula Creek.
And so that's scheduled to break ground and begin construction this spring. And
Conference Operator: what's that?
Gerard Sweeney, Analyst, ROTH Capital Partners: Is that the Harold Edwards Bridge?
Harold Edwards, President and Chief Executive Officer, Limoneira: I think that's the Mark Calinon Bridge. So yes, and that's actually a really great part of the project because that's actually going to create a lot more better access for people in town to get out to the harvest project. And so that's actually going to be a really beneficial part of our project, but there will be some capital expenditure that's required from that. And then we still have the final part of the infrastructure for Phase 3 to go as well. So there is a little bit more fund to CapEx requirements, but there's also community fund districts and the issuance of bond benefits that will come that will help balance that.
The answer to your question is when the next distribution will be, we're not sure at this point. So we're keeping our share in the partnership at this point.
Gerard Sweeney, Analyst, ROTH Capital Partners: Got it. Okay. I appreciate it. Thanks. I'll jump back in
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: line. Great. Thanks, Jerry. Thanks, Jerry.
Conference Operator: Thank you. Our next question is from Ben Kleevec with Lake Street Capital Markets. Please proceed with your question.
Ben Kalief, Analyst, Lake Street Capital Markets: Yes. Thanks for taking my follow-up. Mark, you were talking about avocado yield per acre and I had a follow-up on this. So rough math is that this year in the down year and the alternating cycle that your 800 acres is going to yield something like £9,000 an acre. And you said that over the next few years that you think that 15,000 even in on the downside is going to be possible via how you guys are constructing the orchards and the different technologies to support this.
That's a huge increase. I want to make sure, one, that I heard that right. And then second, if you can elaborate a bit on this, talk about the real drivers here between current yield and where you think you'll be a few years from now?
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Yes. So you did hear it right. We've got a we have been obviously in replanting mode with a lot more trees per acre, almost potentially double in some instances. Our young and really intelligent agricultural team has put together the farming practices, pruning that we just never did. And I'll go back to say that since this last year, we started a group internally called the Avocado Congress, which has focused all the stakeholders together from sales to harvest to farming to the executive team and even external farming board member to come together sometimes weekly during the season to go through how best to take from farm to market the avocados.
And so when we have more trees per acre, obviously that's pretty easy to get from a higher number. We had really antiquated irrigation systems for a long time, which were as we replant these new acreages going forward. We're going to have pressurized lines where before it was literally turn it on and turn it off and you just would have to do 2 week cycles. We're now we could spoon feed on a weekly basis, give all the nutrients you need and it sounds fundamental, but it actually really, really helps as far as long term productivity for a tree. And we're also doing things like drone sprays now, which they're much more precise versus helicopters.
So it's just multifactor of things, but we're like this year we saw on 700 acres over £15,000,000 and so just that alone and half of those trees are still older legacy trees. So we're really confident in that £15,000 number and getting to over £20,000 per acre in those high years when we have perfect weather conditions.
Conference Operator: And so
Harold Edwards, President and Chief Executive Officer, Limoneira: Ben, just for statistics. So the old plantings had approximately 90 trees planted per acre. All of our new plantings are high density with over 180 trees per acre. So you can see the significant increase there. And also just as Mark was mentioning in the way that we're farming them, our internal models are sort of averaging at £17,000 an acre on the new plantings and the new acreage.
And as he said, there'll be years that are lower, there'll be years that are higher. But our team really feels pretty confident that the new planning should drive that £17,000 per acre as we retool the operation.
Ben Kalief, Analyst, Lake Street Capital Markets: Got it. Very interesting. Well, congratulations to the Avocado Congress and hooray for ag tech. So great to hear all that. Thanks for taking my follow-up again.
Mark Palamounten, Executive Vice President and Chief Financial Officer, Limoneira: Thanks, Matt. Thanks, Matt.
Conference Operator: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Harold Edwards for any closing comments.
Harold Edwards, President and Chief Executive Officer, Limoneira: Thank you all for your questions and your interest in Limoneira. Happy holidays to all of you.
Conference Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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