Calavo Growers, Inc. CVGW reported fourth-quarter fiscal 2024 results, with the top line surpassing the Zacks Consensus Estimate but the bottom line falling short of the same. Both metrics increased year over year.
Calavo Growers is now focused on its core avocado and guacamole operations, following the divestiture of its Fresh Cut business. The company is prioritizing operational optimization, disciplined execution and capitalizing on organic growth opportunities to drive expansion. With the scalability of its supply chain, along with a strong focus on cost discipline and efficiencies in SG&A expenses, Calavo Growers is well positioned for a strong year of growth and profitability in fiscal 2025 and beyond.
CVGW’s Quarterly Performance: Key Insights
Calavo Growers reported adjusted earnings of 5 cents per share, missing the Zacks Consensus Estimate of 25 cents. However, the bottom line increased from the year-ago period’s adjusted loss of 2 cents per share.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Calavo Growers, Inc. Price, Consensus and EPS Surprise
Calavo Growers, Inc. Price, Consensus and EPS Surprise
Calavo Growers, Inc. price-consensus-eps-surprise-chart | Calavo Growers, Inc. Quote
The company generated net sales of $170.0 million, which exceeded the Zacks Consensus Estimate of $166 million. The metric also rose 19.5% from the year-ago period.
The gross profit was $16.3 million, up 14% from $14.3 million reported in the year-ago period. This growth was driven by stronger avocado margins in the Grown segment, though it was partially offset by higher fruit input costs in the Prepared segment. However, the gross margin contracted 40 basis points to 9.6%.
SG&A expenses of $13 million increased from $9.3 million in the prior year quarter. As a percentage of net sales, the figure increased 120 basis points to 7.7%. The increase was driven by higher legal and outside service-related expenses of $1 million for investigation costs, along with increased incentive compensation expenses.
Adjusted EBITDA was $6.7 million, representing a 16% decrease compared with $8 million in the prior-year period, due to higher incentive compensation expenses.
CVGW’s Segment Wise Performance Details
Net sales for the Grown segment were $154.6 million, indicating a 23.4% increase compared with the previous year. The segment’s gross profit rose by 24.1%, reaching $14.3 million, up from $11.5 million in the prior-year quarter. This growth was driven by a 10% increase in avocado volume and higher margins per case. Average avocado prices were approximately 16% higher than in the same period last year.
In the Prepared segment, net sales came in at $15.3 million, a decline of 9.4% from the year-ago period. The segment’s gross profit decreased to $2 million, down from $2.7 million in the previous year, primarily due to higher fruit costs.
CVGW’s Financial Health Snapshot
Calavo Growers ended the quarter with cash and cash equivalents of $57 million, liquidity of $108.8 million and shareholders’ equity of $201.8 million. The company had no outstanding borrowings under its credit facility and reported a total debt of $5.1 million, which consists of long-term obligations and finance leases.
Sneak Peek Into CVGW’s Outlook
Calavo Growers is entering fiscal 2025 with significant momentum, projecting double-digit growth in avocado and guacamole sales volumes alongside overall revenue expansion. The company expects its strategic initiatives to deliver substantial value for its shareholders in fiscal 2025 compared to the prior year. This optimism is supported by robust growth drivers, including the acquisition of new customers, innovative product offerings, increased penetration within existing accounts and enhanced global sourcing strategies.
In the Grown segment, avocado performance is expected to remain steady. While tomato volumes are anticipated to decline, improved pricing and stronger margins on purchased tomatoes are projected to deliver double-digit growth in tomato gross profit during fiscal 2025 compared to last year.
In the Prepared segment, Calavo Growers is focused on expanding its guacamole business, following the successful launch of new retail products during the fiscal fourth quarter of 2024. The company expects double-digit sales volume growth for the fiscal 2025 and higher gross margins in this segment, driven by improved operational efficiencies.
Shares of this Zacks Rank #3 (Hold) company have lost 19.4% in the past three months compared with the industry’s decline of 4.8%.
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