FinanceLooker

Excrept from filing document 2024-10-31

s assessment of the effectiveness of its internal control over financial reporting under Section 404 b of the Sarbanes Oxley Act 15 U S C 7262 b by the registered public accounting firm that prepared or issued its audit report
Based on the closing price as reported on the NASDAQ Global Market the aggregate market value of the registrant s Common Stock held by non affiliates on April 30 2024 the last business day of the registrant s most recently completed second fiscal quarter was approximately 324 1 million Shares of Common Stock held by each executive officer and director and by each stockholder affiliated with a director or an executive officer have been excluded from this calculation because such persons may be deemed to be affiliates This determination of affiliate status is not necessarily a conclusive determination for other purposes The number of outstanding shares of the registrant s Common Stock as of November 30 2024 was 18 083 092
Portions of the registrant s Proxy Statement for the 2025 Annual Meeting of Stockholders which we intend to hold on April 9 2025 are incorporated by reference into Part III of this Annual Report on Form 10 K The definitive Proxy Statement will be filed within 120 days after October 31 2024
This Annual Report on Form 10 K this Annual Report contains statements which to the extent that they do not recite historical fact constitute forward looking statements These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include the words may will could should would believe expect anticipate estimate intend plan or other words or expressions of similar meaning We based these forward looking statements on our current expectations about future events The forward looking statements include statements that reflect management s beliefs plans objectives goals expectations anticipations and intentions with respect to our financial condition results of operations future performance and business including statements relating to our business strategy and our current and future development plans
The potential risks and uncertainties that could cause our actual financial condition results of operations and future performance to differ materially from those expressed or implied in this Annual Report include but are not limited to
adverse weather conditions natural disasters and other adverse natural conditions including freezes rains fires winds and droughts that affect the production transportation storage import and export of fresh produce
In addition this Annual Report contains industry data related to our business and the markets in which we operate This data includes projections that are based on a number of assumptions If these assumptions turn out to be incorrect actual results could differ from the projections or estimates We urge you to carefully review this Annual Report particularly the section entitled Risk Factors for a complete discussion of the risks of an investment in our common stock
Although we believe that the expectations reflected in the forward looking statements are reasonable we cannot guarantee future results level of activity performance or achievements Many factors discussed in this Annual Report some of which are beyond our control will be important in determining our future performance Consequently actual results may differ materially from those that might be anticipated from forward looking statements In light of these and other uncertainties you should not regard the inclusion of a forward looking statement in this Annual Report as a representation by us that our plans and objectives will be achieved and you should not place undue reliance on such forward looking statements We undertake no obligation to publicly update or revise any forward looking statements whether as a result of new information future events or otherwise except as required by law
Limoneira Company a Delaware corporation is the successor to several businesses with operations in California since 1893 Our business and operations are described below For detailed financial information with respect to our business and our operations see our consolidated financial statements and the related notes to consolidated financial statements which are included in Item 8 in this Annual Report In addition general information concerning our Company can be found on our website at www limoneira com All of our filings with the SEC including but not limited to Annual Reports on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K and any amendments thereto are available free of charge on our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC The contents of our website referred to above are not incorporated into this Annual Report Further any references to our website are intended to be interactive textual references only
We are primarily an agribusiness company founded and based in Santa Paula California committed to responsibly using and managing our approximately 10 500 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
We are one of California s oldest citrus growers and are one of the largest growers of lemons in the United States According to the California Avocado Commission we are one of the largest growers of avocados in the United States In addition to growing lemons and avocados we grow oranges and wine grapes We have agricultural plantings throughout Ventura and San Luis Obispo Counties in California Yuma County in Arizona La Serena Chile and Jujuy Argentina which collectively consist of approximately 3 400 acres of lemons 1 400 acres of avocados 100 acres of oranges and 400 acres of wine grapes We also operate our own packinghouses in Santa Paula California and Yuma Arizona where we process pack and sell lemons that we grow as well as lemons grown by others We have a 47 interest in Rosales S A Rosales a citrus packing marketing and sales business a 90 interest in Fruticola Pan de Azucar S A 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
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 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 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 These projects include multi family housing single family homes and apartments of approximately 800 units in various stages of planning and development
On December 1 2023 we announced the commencement of a strategic review process to explore potential alternatives aimed at maximizing stockholder value Potential strategic alternatives could include but not be limited to a sale of all or parts of the Company and its assets a merger or other transaction The Board has not set a timetable for completion of the review and no transaction or other outcome is guaranteed to take place At this time we cannot predict the impact that such strategic alternatives might have on our business operations or financial condition
On April 30 2024 our real estate development joint venture with The Lewis Group of Companies Lewis closed an additional 554 residential homesites at the Harvest at Limoneira master planned community in Santa Paula CA Harvest and we recorded equity in earnings of investments of 16 6 million in the second quarter of fiscal year 2024 On June 5 2024 we received a cash distribution of 15 0 million from the joint venture
On May 7 2024 it was announced that the Santa Paula City Council approved the proposal brought by the Company s real estate development joint venture with Lewis to increase the number of entitled lots at Harvest from 1 500 dwelling units to 2 050 dwelling units The Santa Paula City Council approved an amendment allowing for the 550 unit increase on April 3 2024 The 550 unit increase will provide 250 additional single family for sale homesites within Phase 3 of Harvest Additionally the Company in partnership with Lewis plans to construct 300 multi family rental homes on a mixed use portion of the project
On December 17 2024 we declared a cash dividend of 0 075 per common share payable on January 15 2025 in the aggregate amount of approximately 1 4 million to common stockholders of record as of December 30 2024
The COVID 19 pandemic had an adverse impact on the industries and markets in which we conduct business In particular the export market for fresh produce significantly declined due to the COVID 19 pandemic impacts
The decline in demand for our products beginning the second quarter of fiscal year 2020 negatively impacted our sales and profitability and may impact our sales and profitability in future periods 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
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 primarily 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 The rental operations division includes our residential and commercial rentals leased land operations and organic recycling The real estate development division includes our investments in real estate development projects Financial information and discussion of our four reportable segments are contained in the notes to the accompanying consolidated financial statements of this Annual Report
We market and sell lemons directly to our food service wholesale and retail customers throughout the United States Canada Asia and certain other international markets We are one of the largest lemon growers in the United States with approximately 3 400 acres of lemons planted primarily in Ventura County California and in Yuma County Arizona Ventura County is California s top lemon producing county
There are many varieties of lemons with the Lisbon Eureka and Genoa varieties being the predominant varieties marketed on a worldwide basis Approximately 99 of our lemon plantings are of the Lisbon Eureka and Genoa varieties and approximately 1 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 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
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 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
Primarily related to differing soil conditions the care of avocado trees is intensive The need for more production per acre to compete with foreign sources of supply has required us to take an important lead in the practice of dense planting typically four times the number of avocado trees per acre versus traditional avocado plantings and mulching composition to help trees acclimate under conditions that more closely resemble those found in the tropics a better climate for avocado growth
We have approximately 100 acres of oranges planted near La Serena Chile and 400 acres of wine grapes planted in San Luis Obispo County California 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 Additionally we provide farm management services which include farming management and operations services mainly related to the Northern Properties
Our orchards can maintain production for many years For financial reporting purposes we depreciate our orchards from 20 to 30 years depending on the fruit variety We regularly evaluate our orchards production and growing costs and based on these and other factors we may decide to redevelop certain orchards In addition we may acquire agricultural property with existing productive orchards or without productive orchards which would require new orchard plantings The fruit varieties that we grow are typically non producing for approximately the first four to five years after the year of planting Orchards may continue producing fruit longer than their depreciable lives The following table presents the number of acres planted by fruit variety and approximate age of our orchards
We are one of the oldest continuous lemon packing operations in North America 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 Our ability to accurately estimate the size grade and timing of the delivery of the annual lemon crop has a substantial impact on both our costs and the sales price we receive for the fruit
A significant portion of the costs related to our lemon packing operation is fixed We invest considerable time and research into refining and improving our lemon packing through innovation and are continuously searching for new techniques to refine how premium lemons are delivered to our consumers Our strategy for growing the profitability of our lemon packing operations calls for optimizing the percentage of a crop that goes to the fresh market or fresh utilization and procuring a larger percentage of the California and Arizona lemon crop
We own and maintain 240 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 As of October 31 2024 we lease approximately 300 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 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 lease our 1 200 acre Santa Clara ranch in Argentina
We invest in real estate investment projects and recognize that long term strategies are required for successful real estate development activities Our goal is to redeploy real estate earnings and cash flow into the expansion of our agribusiness and other income producing real estate 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 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 800 units in various stages of planning and development The following is a summary of each of the strategic real estate investment properties in which we own an interest
East Area I consists of approximately 500 acres that we historically used as agricultural land and is located in Santa Paula approximately ten miles from the City of Ventura and the Pacific Ocean East Area I is the location for our master planned community of commercial and residential properties named
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 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 Approved project plans include approximately 2 050 residential units and site improvements A total of 1 261 residential units have closed from the project s inception to October 31 2024
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 We formed LLCB II LLC as the development entity contributed our Retained Property to the joint venture and sold a 50 interest to Lewis for approximately 8 0 million
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 1 0 million to LLCB II In June 2024 we received a cash distribution of 15 0 million from LLCB and we expect to receive approximately 165 0 million from LLCB LLCB II and East Area II over the next six years of the projects
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 In July 2021 we entered into a non binding letter of intent to sell approximately 25 acres of our East Area II property in five staged purchases to an investment company for the purpose of constructing a medical campus consisting of medical office buildings and an acute care hospital Completion of the transaction is subject to the execution of a purchase and sale agreement and resolution of certain contingencies
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 The following is a brief list of what we believe are our significant competitive strengths with respect to our agribusiness operations
Our agricultural properties in Ventura County are located near the Pacific Ocean which provides an ideal environment for growing lemons and avocados Our agricultural properties in Yuma Arizona are also located in an area that is well suited for growing citrus crops
We made investments in ground based solar projects that provide us with tangible and intangible non revenue generating benefits 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 Moreover electricity that we generate and do not use is conveyed back to the utility companies Finally over time we expect that our customers and the end consumers of our fruit will value the investments that we made in renewable energy as a part of our packing operations which we believe may help us differentiate our products from similar commodities
We made various other investments in water rights and mutual water companies 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
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 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 We will also use more third party grower and supplier fruit to reduce the impact of pricing volatility and rising farming costs
We believe the asset lighter model will enable us to achieve revenue and cash flow growth by reducing investment risk in North and South America generating more stable and higher growth in cash flow and earnings and improving our annual return on invested capital
We intend to continue 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
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 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
We regularly monitor our costs for redundancies and opportunities for cost reductions In this regard cost per carton is a function of throughput We continually seek to acquire additional lemons from third party growers and suppliers to pack through our packing facilities Third party growers and suppliers are only added if we determine their fruit is of good quality and can be cost effective for both the grower and us Of most importance is the overall fresh utilization rate for our fruit which is directly related to quality
Our plantings of avocados have been profitable and historically have been pursued to diversify our product line We plan to expand our avocado production by 1 000 acres through fiscal year 2027 to capitalize on robust consumer demand trends
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 We intend to explore opportunities to expand our international sales and marketing of lemons We have the ability to supply a wide range of customers and markets and because we produce high quality lemons we can export our lemons to international customers which many of our competitors are unable to supply
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
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
We recognize that long term strategies are required for successful real estate development activities We thus intend to maintain our position as a responsible agricultural landowner and major employer in Ventura County while focusing our real estate development activities on those agricultural land parcels that we believe offer the best opportunities to demonstrate our long term vision for our community
We market and sell our lemons directly to our food service wholesale and retail customers in the United States Canada Asia and certain other international markets We sold lemons and other citrus to 194 U S and international customers during fiscal year 2024 We sell our avocados to third party packinghouses and our wine grapes to wine producers
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 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 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 Our lemons and other citrus also compete with other fruits and vegetables for the share of consumer expenditures devoted to fresh fruit and vegetables apples pears melons pineapples and other tropical fruit Avocado products compete in the supermarket with hummus products and other dips and salsas For our specific crops the size of the 2023 U S market was approximately 615 million for lemons both fresh and juice approximately 250 million for avocados and approximately 985 million for oranges both fresh and juice 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 Our greatest direct competition for each of our current real estate development properties in Ventura County comes from other residential and commercial developments in nearby areas
In our fresh lemons and lemon packing segments paper is considered a material raw product for our business because most of our products are packed in cardboard cartons for shipment Paper is readily available and we have numerous suppliers for such material In our agribusiness division petroleum based products such as herbicides and pesticides are considered raw materials and we have numerous suppliers for these products
We have numerous trademarks and brands under which we market and sell our fruits particularly lemons domestically and internationally many of which have been owned for decades The material brands of Limoneira lemons include but are not limited to One World of Citrus Santa Paula Bridal Veil Fountain Golden Bowl and Level These trademarks are owned by us and registered with the United States Patent and Trademark Office We also acquired certain lemon brands with acquisitions including Kiva Kachina Oxnard Lemon and Trapani Fresh
As with any agribusiness enterprise our agribusiness operations are predominantly seasonal in nature The harvest and sale of our lemons avocados and oranges 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
Our agribusiness and real estate development divisions are subject to a broad range of evolving federal state and local environmental laws and regulations For example the growing packing storing and distributing of our products is extensively regulated by various federal and state agencies The California State Department of Food and Agriculture oversees our packing and processing of lemons and conducts tests for fruit quality and packaging standards We are also subject to laws and regulations that govern the use of pesticides and other potentially hazardous substances and the treatment handling storage and disposal of materials and waste and the remediation of contaminated properties Advertising of our products is subject to regulation by the Federal Trade Commission and our operations are subject to certain health and safety regulations including those issued under the Occupational Safety and Health Act
We seek to comply at all times with all such laws and regulations and to obtain any necessary permits and licenses and we are not aware of any instances of material non compliance We believe our facilities and practices are sufficient to maintain compliance with applicable governmental laws regulations permits and licenses Nevertheless there is no guarantee that we will be able to comply with any future laws and regulations for necessary permits and licenses Our failure to comply with applicable laws and regulations or obtain any necessary permits and licenses could subject us to civil remedies including fines injunctions recalls or seizures as well as potential criminal sanctions 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
As of October 31 2024 we had 241 employees of which 90 were salaried and 151 were hourly None of our employees are subject to a collective bargaining agreement We believe that our relations with our employees are good
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
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 also seek to support the welfare of the people who produce process and harvest the products we sell 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 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 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
We own and maintain 240 residential housing units located in Ventura County California We lease these housing units to employees former employees and outside tenants 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 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
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 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 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 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
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 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 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 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
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 Furthermore it could expose us to litigation The public announcement of a strategic alternative may also yield a negative impact on operating results if prospective or existing service providers are reluctant to commit to new or renewal contracts or if existing customers decide to move their business to a competitor
We do not intend to disclose developments or provide updates on the progress or status of the strategic process until our Board deems further disclosure is appropriate or required 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
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
Fresh produce is vulnerable to adverse weather conditions including windstorms floods drought and temperature extremes which are quite common and may occur with higher frequency or be less predictable in the future due to the effects of climate change Unfavorable growing conditions can reduce both crop size and crop quality In extreme cases entire harvests may be lost in some geographic areas We purchase crop insurance for certain crops which partially mitigates our exposure
All of our crops are subject to damage from frosts and freezes and this has happened periodically in the past In some cases the fruit is damaged or ruined in the case of extended periods of cold the trees can also be damaged or killed
Additionally a significant portion of our agricultural plantings and our corporate headquarters are located in a region of California that is prone to natural disasters such as earthquakes and wildfires For example in December 2017 high winds and the related Southern California wildfires caused a brief power outage at our Santa Paula California packinghouse and destroyed 14 of our farm worker housing units While our orchards did not suffer significant damage in the wildfire the potential for significant damage to a substantial amount of our plantings from a natural disaster in the future continues to exist Furthermore if a natural disaster or other event occurs that prevents us from using all or a significant portion of our corporate headquarters as a result of a power outage or otherwise or that damages critical infrastructure it may be difficult or in certain cases impossible for us to continue our business for a substantial amount of time
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
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
Fresh produce is vulnerable to crop disease and to pests e g Mediterranean Fruit Fly and the Asian Citrus Psyllid ACP which may vary in severity and effect depending on the stage of production at the time of infection or infestation the type of treatment applied and climatic conditions
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 a federal action quarantine pest subject to interstate and international quarantine restrictions by the United States Department of Agriculture USDA including a prohibition on the movement of nursery stock out of quarantine areas and a requirement that all citrus fruit be cleaned of leaves and stems prior to movement out of the quarantine area 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 a residential property in the City of Santa Paula California Following this detection the California Department of Food and Agriculture established a mandatory five mile radius quarantine area encompassing approximately 1 100 acres of Limoneira owned lemon orchards In July 2024 an additional 75 HLB positive trees were detected on residential properties in the City of Santa Paula In response the quarantine area was expanded in September 2024 to account for the new detections The quarantine restricts the movement of citrus fruit trees and related plant materials subject to specific protocols The estimated additional costs to spray insecticides on our orchards within the quarantine area are 0 3 million to 0 4 million for fiscal year 2025 There is no assurance that HLB will not be detected on Limoneira orchards in the future
The costs to control these diseases and other infestations vary depending on the severity of the damage and the extent of the plantings affected Moreover there can be no assurance that available technologies to control such infestations will continue to be effective These infestations 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
Directly obtaining and retaining customers particularly chain stores and other large customers is highly competitive and the prices or other terms of our sales arrangements may not be sufficient to retain existing business maintain current levels of profitability or obtain new business 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
Excess supply often causes severe price competition in our industry and the worldwide lemon market is currently in an over supplied position Growing conditions in various parts of the world particularly weather conditions such as windstorms floods droughts and freezes as well as diseases and pests are primary factors affecting market prices because of their influence on the supply and quality of product 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 The selling price received for each type of produce depends on all of these factors including the availability and quality of the produce item in the market and the availability and quality of competing types of produce
In addition general public perceptions regarding the quality safety or health risks associated with particular food products could reduce demand and prices for some of our products To the extent that consumer preferences evolve away from products that we produce for health or other reasons and we are unable to modify our products or to develop products that satisfy new consumer preferences there will be a decreased demand for our products However even if market prices are unfavorable produce items which are ready to be or have been harvested must be brought to market promptly A decrease in the selling price received for our products due to the factors described above could have a material adverse effect on our business results of operations and financial condition
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 Increased costs for purchased fruit have negatively impacted our operating results in the past and there can be no assurance that they will not adversely affect our operating results in the future
The price of various commodities can significantly affect our costs The cost of petroleum based products is volatile and there can be no assurance that there will not be further increases in such costs in the future If the price of oil rises the costs of our herbicides and pesticides can be significantly impacted
The cost of paper is also significant to us because many of our products are packed in cardboard boxes for shipment If the price of paper increases and we are not able to effectively pass these price increases along to our customers then our operating income will decrease Increased costs for paper have negatively impacted our operating income in the past and there can be no assurance that these increased costs will not adversely affect our operating results in the future
We primarily utilize labor contractors to grow harvest and deliver our fruit to our lemon packinghouse or outside packing facilities We utilize a combination of employees and labor contractors to process our lemons in our lemon packing facility Our employees and contractors are in demand by other agribusinesses and other industries Shortages of labor could delay our harvesting or lemon processing activities or could result in increases in labor costs
Our labor contractors and we are subject to government mandated wage and benefit laws and regulations For example the State of California where a substantial number of our labor contractors are located passed regulations that will increase minimum wage rates to 16 50 per hour effective January 1 2025 due to a cost of living increase provision in the state s minimum wage law The State of Arizona minimum wage rates also rise each year based on the annual cost of living and will increase to 14 70 per hour effective January 1 2025 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
We engage third parties to provide personnel for our harvesting operations The availability and number of such workers is subject to decrease if there are changes in U S immigration laws The states in which we operate are considering or have already adopted new immigration laws or enforcement programs and the U S Congress and the Department of Homeland Security from time to time consider and may implement changes to federal immigration laws regulations or enforcement programs Immigration laws have recently been an area of considerable focus by the Department of Homeland Security with enforcement operations taking place across the country resulting in arrests and detentions of unauthorized workers Termination of a significant number of personnel who are found to be unauthorized workers or the scarcity of available personnel to harvest our agricultural products could cause harvesting costs to increase or could lead to the loss of product that is not timely harvested which could have a material adverse effect to our citrus and avocado operations financial position results of operations and cash flows
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 Extended periods of drought in California may put additional pressure on the use and availability of water for agricultural uses and in some cases governmental authorities have diverted water to other uses As California has grown in population there are increasing and multiple pressures on the use and distribution of water which many view as a finite resource Lack of available potable water can also limit real estate development
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 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 acquired water rights in Chile
California received above average precipitation during the 2022 2023 and 2023 2024 rainfall seasons after experiencing three years of below average precipitation and drought conditions The above average precipitation helped to alleviate the drought conditions in California As of October 31 2024 the state was free from extreme drought conditions and Ventura County was free from any drought conditions We continue to assess the impact drought conditions may have on our California orchards
In August 2023 and August 2024 the U S Bureau of Reclamation announced that Lake Mead will operate in a Tier 1 shortage in 2024 and 2025 respectively which requires Arizona to forfeit approximately 18 of the state s yearly allotment of water from Lake Mead In response to this and prior years water shortages we entered into fallowing agreements during fiscal years 2023 and 2022 and continue to assess the impact these ongoing reductions may have on our Arizona orchards
For fiscal year 2024 irrigation costs for our agricultural operations were similar compared to fiscal year 2023 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 for fiscal year 2025 that includes drilling new wells and upgrading existing wells and irrigation systems
We believe we have access to adequate supplies of water for our agricultural operations as well as our real estate development and rental operations and currently do not anticipate that future drought conditions will have a material impact on our operating results 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
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 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
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 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 Under the Federal Insecticide Fungicide and Rodenticide Act the Federal Food Drug and Cosmetic Act and the Food Quality Protection Act of 1996 the EPA is undertaking a series of regulatory actions relating to the evaluation and use of pesticides in the food industry Similarly in the EU regulation EC No 1107 2009 fundamentally changed the pesticide approval process to hazard criteria based on the intrinsic properties of the substance These actions and future actions regarding the availability and use of pesticides could have an adverse effect on us In addition if a regulatory agency were to determine that we are not in compliance with a regulation in that agency s jurisdiction this could result in substantial penalties and a ban on the sale of part or all of our products in that jurisdiction
The full impact of a global economic downturn on customers vendors and other business partners such as that seen with the COVID 19 pandemic cannot be anticipated For example major customers or vendors may have financial challenges unrelated to us that could result in a decrease in their business with us or in extreme cases cause them to file for bankruptcy protection Similarly parties to contracts may be forced to breach their obligations under those contracts 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 Similarly stresses and pressures in the industry may result in impacts on our business partners and competitors which could have wide ranging impacts on the future of the industry
The sale of food products for human consumption involves the risk of injury to consumers Such injuries may result from tampering by unauthorized third parties product contamination or spoilage including the presence of foreign objects substances chemicals other agents or residues introduced during the growing storage handling or transportation phases While we are subject to governmental inspection and regulations and believe our facilities comply in all material respects with all applicable laws and regulations we cannot be sure that consumption of our products will not cause a health related illness in the future or that we will not be subject to claims or lawsuits relating to such matters Even if a product liability claim is unsuccessful or is not fully pursued the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image Moreover claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others We maintain product liability insurance however we cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage
An extended interruption in our ability to ship our products could have a material adverse effect on our business financial condition and results of operations Similarly any extended disruption in the distribution of our products or supply chain issues could have a material adverse effect on our business financial condition and results of operations 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
Consumer and institutional recognition of the LIMONEIRA One World of Citrus Santa Paula Bridal Veil Fountain Golden Bowl Level Kiva Kachina Oxnard Lemon and Trapani Fresh trademarks and related brands and the association of these brands with high quality and safe food products are an integral part of our business The occurrence of any events or rumors that cause consumers and or institutions to no longer associate these brands with high quality and safe food products may materially adversely affect the value of our brand names and demand for our products
Growing packaging storing and distributing food products are activities subject to extensive federal state and local regulation as well as foreign regulation The U S Food and Drug Administration the FDA the USDA and various state and local public health and agricultural agencies regulate these aspects of our operations Our business is subject to the FDA Food Safety Modernization Act to ensure food safety This Act provides direct recall authority to the FDA and includes a number of other provisions designed to enhance food safety including increased inspections by the FDA of food facilities The Federal Perishable Agricultural Commodities Act which specifies standards for the sale shipment inspection and rejection of agricultural products governs our relationships with our fresh food suppliers with respect to the grading and commercial acceptance of product shipments Import and export controls and similar laws and regulations in both the United States and elsewhere affect our business Issues such as health and safety which may slow or otherwise restrict imports and exports could adversely affect our business In addition the modification of existing laws or regulations or the introduction of new laws or regulations could require us to make material expenditures or otherwise adversely affect the way that we historically operated our business
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 Additionally in many countries outside of the United States particularly in those with developing economies it may be common for others to engage in business practices prohibited by laws and regulations applicable to us such as the Foreign Corrupt Practices Act or similar local anti bribery laws 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
Our infrastructure 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 This could have a material adverse effect on our business which could impact our results of operations and our financial condition
To service our debt we require a certain amount of cash Our ability to generate cash make scheduled payments or refinance our obligations depends on our successful financial and operating performance Our financial and operating performance cash flow and capital resources depend upon prevailing economic conditions and various financial business and other factors many of which are beyond our control These factors include among others
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 If we are required to take any actions referred to above it could have a material adverse effect on our business financial condition and results of operations In addition we cannot assure you that we would be able to take any of these actions on terms acceptable to us or at all or that these actions would enable us to continue to satisfy our capital requirements or that these actions would be permitted under the terms of our various debt agreements
Restrictive covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a variety of transactions which could adversely restrict our financial and operating flexibility and subject us to other risks
Our revolving and non revolving credit and term loan facilities contain various restrictive covenants that limit our ability to take certain actions In particular these agreements limit our ability to among other things
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 At October 31 2024 we were in compliance with the debt service coverage ratio of 1 25 1 0 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
Any or all of these covenants could have a material adverse effect on our business by limiting our ability to take advantage of financing merger and acquisition or other corporate opportunities and to fund our operations Any future debt could also contain financial and other covenants more restrictive than those imposed under our line of credit and term loan facilities A breach of a covenant or other provision in any credit facility governing our current and future indebtedness could result in a default under that facility and due to cross default and cross acceleration provisions could result in a default under our other credit facilities Upon the occurrence of an event of default under any of our credit facilities the applicable lender s could elect to declare all amounts outstanding to be immediately due and payable and with respect to our revolving credit facility terminate all commitments to extend further credit If 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
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
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 Effective as of February 22 2023 the maximum borrowing amount was reduced to 35 0 million The obligations under the Loan were guaranteed by certain principals from Lewis and us In May 2024 the Loan and corresponding guarantee were cancelled Our real estate development activities could require future loans that may result in future guarantees
Our AgWest Farm Credit Facility is subject to variable rates which generally change as interest rates change 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 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
The global capital and credit markets experienced increased volatility and disruption over the past several years making it more difficult for companies to access those markets We depend in part on stable liquid and well functioning capital and credit markets to fund our operations Although we believe that our operating cash flows and existing credit facilities will permit us to meet our financing needs for the foreseeable future there can be no assurance that continued or increased volatility and disruption in the capital and credit markets will not impair our liquidity or increase our costs of borrowing Our business could also be negatively impacted if our suppliers or customers experience disruptions resulting from tighter capital and credit markets or a slowdown in the general economy
The process of project development and the commitment of financial and other resources occur long before a real estate project comes to market A real estate project could come to market at a time when the real estate market is depressed It is also possible in a rural area like ours that no market for the project will develop as projected
Future economic instability or tightening in the credit markets could lead to another housing market collapse which could adversely affect our real estate development operations and those of our equity method investments Future real estate sales revenues financial condition results of operations and equity in earnings of investments could suffer as a result Our business is sensitive to economic conditions in California where our real estate development properties are located
Higher interest rates generally impact the real estate industry by making it harder for buyers to qualify for financing which can lead to a decrease in the demand for residential commercial or industrial sites Any decrease in demand will negatively impact our proposed developments During 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 During 2024 the Board of Governors of the Federal Reserve System took actions in easing the monetary policy by cutting interest rates Market interest rates may increase in the future and the increase may materially and negatively affect us 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
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 In addition the zoning that ultimately is approved could include density provisions that would limit the number of homes and other structures that could be built within the boundaries of a particular area which could adversely impact the financial returns from a given project In addition in the past many states cities and counties including Ventura County approved various slow growth or urban limit line measures
The land use approval processes we must follow to ultimately develop our projects have become increasingly complex Moreover the statutes regulations and ordinances governing the approval processes provide third parties the opportunity to challenge the proposed plans and approvals As a result the prospect of third party challenges to planned real estate developments provides additional uncertainties in real estate development planning and entitlements Third party challenges in the form of litigation would by their nature adversely affect the length of time and the cost required to obtain the necessary approvals In addition adverse decisions arising from any litigation would increase the costs and length of time to obtain ultimate approval of a project and could adversely affect the design scope plans and profitability of a project
We are subject to environmental regulations and opposition from environmental groups that could cause delays and increase the costs of our real estate development efforts or preclude such development entirely
Environmental laws that apply to a given site can vary greatly according to the site s location and condition the present and former uses of the site and the presence or absence of sensitive elements like wetlands and endangered species 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 In addition in California third parties have the ability to file litigation challenging the approval of a project which they usually do by alleging inadequate disclosure and mitigation of the environmental impacts of the project While we have worked with representatives of various environmental interests and wildlife agencies to minimize and mitigate the impacts of our planned projects certain groups opposed to development may oppose our projects vigorously so litigation challenging their approval could occur Recent concerns over the impact of development on water availability and global warming increases the breadth of potential obstacles that our developments face
All of our real estate development projects are located in California and our business is especially sensitive to the economic conditions within California 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
If the residential real estate market weakens or instability of the mortgage industry and commercial real estate financing exists our residential real estate business could be adversely affected An excess supply of homes available due to foreclosures or the expectation of deflation in house prices could also have a negative impact on our ability to sell our inventory when it becomes available
We utilize third party contractor and consultant arrangements to assist us in operating our real estate development division 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 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
We intend to develop land and real estate properties as suitable opportunities arise taking into consideration the general economic climate New real estate development projects have a number of risks including the following
The financial performance of our real estate development activities is closely related to our success in obtaining land use entitlements for proposed development projects Obtaining all of the necessary entitlements to develop a parcel of land is often difficult costly and may take several years or more to complete In some situations we may be unable to obtain the necessary entitlements to proceed with a real estate development or may be required to alter our plans for the development Delays or failures to obtain these entitlements may have a material adverse effect on our financial results
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 Accordingly we have and may continue to incur substantial indebtedness to finance our real estate development and land development activities Although we believe that internally generated funds and current and available borrowing capacity will be sufficient to fund our capital and other expenditures including additional land acquisition development and construction activities and the amounts available from such sources may not be adequate to meet our needs If such sources were insufficient we would seek additional capital in the form of debt from a variety of potential sources including bank financing The availability of borrowed funds to be used for additional land acquisition development and construction may be greatly reduced and the lending community may require increased amounts of equity to be invested in a project by borrowers in connection with new loans The failure to obtain sufficient capital to fund our planned expenditures could have a material adverse effect on our business and operations and our results of operations in future periods
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
Many companies compete in our different businesses However only a few well established companies operate on an international national and regional basis with one or several product lines We face strong competition from these and other companies in all our product lines
Some of our competitors may have greater operating flexibility and in certain cases this may permit them to respond better or more quickly to changes in the industry or to introduce new products and packaging more quickly and with greater marketing support
There can be no assurance that we will continue to compete effectively with our present and future competitors and our ability to compete could be materially adversely affected by our debt levels and debt service requirements
We distribute our products both nationally and internationally and have foreign subsidiaries with functional currencies besides the U S dollar 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 and our foreign subsidiaries In the past periods of a strong U S dollar relative to other currencies 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 major impact on our agribusiness operations 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 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
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
Computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties create system disruptions or cause shutdowns Computer programmers and hackers also may be able to develop and deploy viruses worms and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products In addition sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture including bugs and other problems that could unexpectedly interfere with the operation of the system The costs to us to eliminate or alleviate cyber or other security problems bugs viruses worms malicious software programs and security vulnerabilities could be significant and our efforts to address these problems may not be successful and could result in interruptions delays cessation of service and loss of existing or potential customers that may impede our sales packing distribution or other critical functions
Portions of our IT infrastructure also may experience interruptions delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time We may not be successful in implementing new systems and transitioning data which could cause business disruptions and be more expensive time consuming disruptive and resource intensive Such disruptions could adversely impact our ability to fulfill orders and interrupt other processes Delayed sales lower margins or lost customers resulting from these disruptions could adversely affect our financial results stock price and reputation
We intend to continue to consider acquisition prospects that complement our business While we are not currently a party to any agreement with respect to any acquisitions we may acquire other businesses in the future Future acquisitions by us could result in accounting charges potentially dilutive issuances of equity securities and increased debt and contingent liabilities any of which could have a material adverse effect on our business and the market price of our common stock Acquisitions entail numerous risks including the integration of the acquired operations diversion of management s attention to other business concerns risks of entering markets in which we have limited prior experience and potential loss of key employees of acquired organizations We may be unable to successfully integrate businesses or the personnel of any business that might be acquired in the future and our failure to do so could have a material adverse effect on our business and on the market price of our common stock Additionally in fiscal year 2024 we recorded an impairment charge on our most recently acquired foreign subsidiary and we may incur further impairment charges on this or other foreign subsidiaries in the future
Investing in our common stock involves a high degree of risk There are numerous and varied risks known and unknown that may prevent us from achieving our goals The risks described here are not the only ones we will face If any of these risks or other risks actually occurs our business financial condition results of operations or future prospects could be materially and adversely affected In such event the trading price of our common stock could decline and investors in our common stock could lose all or part of their investment
The overall market and the price of our common stock may fluctuate greatly and we cannot assure you that you will be able to resell shares at or above market price The trading price of our common stock may be significantly affected by various factors including
As of October 31 2024 directors and members of our executive management team beneficially owned or controlled approximately 8 9 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 The sale by any of our large stockholders of a significant portion of that stockholder s holdings could have a material adverse effect on the market price of our common stock In addition the registration of any significant amount of additional shares of our common stock will have the immediate effect of increasing the public float of our common stock and any such increase may cause the market price of our common stock to decline or fluctuate significantly
Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us even if the change in control would be beneficial to stockholders These provisions include the following
As a company with publicly traded securities we incur and will continue to incur significant legal accounting and other expenses 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
Cybersecurity is an on going risk to our business We rely on complex information technology systems and networks to conduct business including communicating with employees and our packing facilities sourcing citrus from third party growers and suppliers selling and shipping our products and reporting results of operations While we employ resources to monitor and protect our technology infrastructure and sensitive information these security measures or those of our third party vendors may not prevent all attempted security breaches or cyber attacks A substantial disruption to our or our third party vendors information technology systems whether caused by a significant cyber incident or other unforeseen events could adversely affect our operations
The Company is committed to managing cybersecurity risks through ongoing vigilance and enhancement of our cybersecurity policies procedures and practices extending to the safeguarding of sensitive information belonging to the Company our growers and suppliers customers and employees Through the execution of a leading practice risk based strategy we are enhancing capabilities to further protect our critical assets by implementing preventive and detective controls and performing continuous security monitoring and active threat response activities The enhancement of the Company s cybersecurity risk management strategy and related procedures is a continuous activity to ensure the appropriate identification assessment and response to risks from cybersecurity threats that may adversely impact our operations This includes our development and operationalizing of third party security requirements incident response procedures and employee training and awareness programs to improve cybersecurity hygiene throughout our organization Additionally we proactively seek input from third party cybersecurity consultants to independently evaluate our systems and processes further identify risks and aid us in strengthening our defenses and improve our overall security posture
In fiscal year 2024 the Company experienced no cybersecurity incidents that materially impacted our business strategy operations or financial condition We maintain cybersecurity insurance coverage to supplement our cybersecurity program however this insurance may not be sufficient to cover all potential losses including reputational damage or costs incurred to improve or strengthen systems against future threats Recognizing the increasing sophistication of cyber threats we are actively enhancing our cybersecurity risk management efforts to minimize the likelihood and impact of such incidents
Our Board of Directors through its Risk Committee with members having extensive experience in finance asset management and agribusiness operations oversees the cybersecurity risk management program and is provided quarterly updates by the Vice President of Packing Technology and third party security consultants to address our cybersecurity risk mitigation efforts These updates include the progress of our risk mitigation efforts cybersecurity strategies and investments The frequency of these updates allows for informed decision making and ensures that our Board of Directors is briefed on cybersecurity risks
Our Vice President of Packing Technology and our Information Security team are also responsible for identifying assessing and mitigating cybersecurity risks across the Company All information security managers have attained a bachelor s degree in a related field of study with several also having industry leading certifications in cybersecurity This collective team has experience in information security and cybersecurity risk management and performs detection and monitoring of cybersecurity threats and incidents on an ongoing basis through a combination of security tooling alerting mechanisms automated systems and manual processes to continue to preserve the confidentiality availability and integrity of our business operations
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 also have an interest in a partnership that owns approximately 200 acres of land The land used for agricultural plantings consists of approximately 3 400 acres of lemons approximately 1 400 acres of avocados approximately 100 acres of oranges and approximately 400 acres of wine grapes We believe that our properties are generally suitable to meet our production needs for the foreseeable future Our agribusiness land holdings are summarized below as of October 31 2024 in thousands
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 provide the majority of the power to operate our packing facility
We own and maintain 240 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
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 believe we have adequate supplies of water for our agribusiness segments as well as our rental and real estate development activities 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 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 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 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
Our rights to extract groundwater from the Santa Paula Basin are governed by the Santa Paula Basin Judgment the Judgment The Judgment was entered into in 1996 by stipulation among the United Water Conservation District the City of Ventura and various members of the Santa Paula Basin Pumpers Association the Association 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 11 400 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 Our investments in these water companies provide us with the right to receive a proportionate share of water from each of the water companies
We believe water is a natural resource that is critical to economic growth in the western United States and firm reliable water rights are essential to our sustainable business practices Consequently we have long been a private steward and advocate of prudent and efficient water management We have made substantial investments in securing water and water rights in quantities that are sufficient to support and we believe will exceed our long term business objectives We strive to follow best management practices for the diversion conveyance distribution and use of water In the future we intend to continue to provide leadership in the area of and seek innovation opportunities that promote increased water use efficiency and the development of new sources of supply for our neighboring communities
From time to time we are a party to various lawsuits arbitrations or mediations that arise in the ordinary course of business The disclosure called for by Part I 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
Our common stock is traded on The NASDAQ Stock Market LLC NASDAQ under the symbol LMNR There is no assurance that our common stock will continue to be traded on NASDAQ or that any liquidity will exist for our stockholders
On November 30 2024 there were approximately 220 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
In December 2024 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
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 Food Producers Index assuming reinvestment of dividends
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
s Discussion and Analysis of Financial Condition and Results of Operations MD A is intended to promote understanding of the results of operations and financial condition MD A is provided as a supplement to and should be read in conjunction with our consolidated financial statements and the accompanying Notes to Consolidated Financial Statements Part II Item 8 of this Form 10 K This discussion and analysis contains forward looking statements that involve risks uncertainties and assumptions 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 2024 compared to fiscal year 2023 For discussion related to the results of operations and changes in financial condition for fiscal year 2023 compared to fiscal year 2022 refer to Part II Item 7 Management
s Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 2023 Form 10 K which was filed with the United States Securities and Exchange Commission SEC on December 21 2023
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 10 500 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
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 primarily 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 The rental operations division includes our residential and commercial rentals comprised of 240 completed rental units leased land operations and organic recycling The real estate development division includes our investments in real estate development projects Generally we see our Company as a land and farming company that generates annual cash flows to support our progress into diversified real estate development activities As real estate developments are monetized our agriculture business will then be able to expand more rapidly into new regions and markets
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 impairment of intangible asset gain on disposal of assets net cash bonus related to sale of assets gain on legal settlement and severance benefits are important measures to evaluate our results of operations between periods on a more comparable basis Such measurements are not prepared in accordance with U S generally accepted accounting principles GAAP and should not be construed as an alternative to reported results determined in accordance with GAAP The non GAAP information provided is unique to us and may not be consistent with methodologies used by other companies
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
Total net revenues for fiscal year 2024 were 191 5 million compared to 179 9 million for fiscal year 2023 The 6 increase of 11 6 million was primarily due to increased agribusiness revenues from avocados partially offset by decreased agribusiness revenues from lemons and specialty citrus and other crops as detailed below in thousands
Lemons The decrease for fiscal year 2024 compared to fiscal year 2023 was primarily due to decreased volume partially offset by higher prices of fresh lemons sold Fresh lemon sales were 84 0 million and 86 8 million in aggregate on 4 5 million and 4 8 million cartons of lemons sold at average per carton prices of 18 87 and 18 24 for fiscal years 2024 and 2023 respectively Lemon revenues included brokered lemons and other lemon sales of 32 0 million and 26 2 million lemon packing of 17 1 million and 20 6 million and lemon by product sales of 3 0 million and 3 0 million respectively for fiscal years 2024 and 2023 Fiscal year 2023 revenues included settlement proceeds of 1 4 million allocated to lemons
Avocados The increase for fiscal year 2024 compared to fiscal year 2023 was due to increased volume and higher prices of avocados sold The California avocado crop typically experiences alternating years of high and low production due to plant physiology We sold 15 1 million and 3 8 million pounds of avocados at an average price per pound of 1 67 and 1 06 for fiscal years 2024 and 2023 respectively Fiscal year 2023 revenues included settlement proceeds of 2 4 million allocated to avocados and crop insurance proceeds of 0 7 million
Oranges The decrease for fiscal year 2024 compared to fiscal year 2023 was primarily due to decreased volume and lower prices of oranges sold We sold 280 000 and 292 000 cartons of oranges at an average price per carton of 18 53 and 19 79 for fiscal years 2024 and 2023 respectively
Specialty citrus and other crops The decrease for fiscal year 2024 compared to fiscal year 2023 was primarily due to decreased volume partially offset by higher prices of specialty citrus sold We sold 79 000 and 240 000 40 pound carton equivalents of specialty citrus at an average price per carton of 28 23 and 27 18 for fiscal years 2024 and 2023 respectively Additionally we sold 2 9 million of wine grapes for both fiscal years 2024 and 2023
Farm management Farm management revenue is comprised primarily of Northern Properties farming management and operations services The increase in farm management revenue for fiscal year 2024 compared to fiscal year 2023 was primarily due to twelve months of activity in fiscal year 2024 compared to nine months of activity in fiscal year 2023
Total costs and expenses for fiscal year 2024 were 197 7 million compared to 169 1 million for fiscal year 2023 The 17 increase of 28 6 million was primarily due to the 2023 net gain on disposal of assets the 2023 gain on legal settlement and an increase in selling general and administrative expenses partially offset by a decrease in agribusiness costs and expenses Agribusiness costs and expenses are detailed below in thousands
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 decrease for fiscal year 2024 compared to fiscal year 2023 was primarily due to decreased volume We packed and sold 4 5 million and 4 8 million cartons of lemons at average per carton costs of 9 60 and 9 61 for fiscal years 2024 and 2023 respectively
Harvest costs The decrease in harvest costs for fiscal year 2024 compared to fiscal year 2023 was primarily due to decreased volume of lemons harvested related to the sale of the Northern Properties partially offset by increased volume of avocados 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 The decrease for fiscal year 2024 compared to fiscal year 2023 was primarily due to 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 other growers and suppliers is referred to as third party grower and supplier costs The increase for fiscal year 2024 compared to fiscal year 2023 was primarily due to increased volume and higher prices of third party grower fruit sold We incurred costs for third party grower fruit of 40 9 million and 31 9 million for fiscal years 2024 and 2023 respectively Of the 4 5 million and 4 8 million cartons of lemons packed and sold 3 2 million 72 and 2 6 million 54 were procured from third party growers at average per carton prices of 12 76 and 12 44 for fiscal years 2024 and 2023 respectively The increased volume for third party grower fruit was primarily due to the sale of the Northern Properties and the related marketing agreement Additionally we incurred costs for supplier costs and purchased packed fruit for resale of 31 3 million and 29 4 million for fiscal years 2024 and 2023 respectively
Other operations expenses for fiscal year 2024 were 5 3 million compared to 4 6 million for fiscal year 2023 The increase in other operations expenses was primarily due to severance benefits paid in fiscal year 2024 and increased residential and commercial rental expenses
Gain on disposal of assets net for fiscal year 2024 was 0 5 million compared to 28 8 million for fiscal year 2023 The decrease was primarily due to the 2023 gain on the sale of the Northern Properties partially offset by the 2023 loss on disposal of Cadiz Ranch assets
We recorded an income tax provision of 4 4 million and 4 2 million on pre tax income of 11 5 million and 13 4 million for fiscal years 2024 and 2023 respectively The tax provision recorded for fiscal year 2024 differs from the U S federal statutory tax rate of 21 0 primarily due to foreign jurisdictions that are taxed at different rates state taxes tax impact of stock based compensation executive compensation nondeductible tax items and valuation allowances on certain deferred tax assets of foreign subsidiaries Our effective tax rate for fiscal years 2024 and 2023 was 37 9 and 31 8 respectively
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 Each segment is subject to review and evaluations related to current market conditions market opportunities and available resources During fiscal year 2024 the Company changed its reporting of other revenue and other costs and includes these items in the other agribusiness segment instead of the fresh lemons segment Prior years information has been restated to conform to the current year s presentation See Note 21 Segment Information for additional information regarding our operating segments
Fresh lemons segment revenue is comprised of sales of fresh lemons lemon by products brokered lemons and other lemon revenue Our fresh lemons segment total net revenues for fiscal year 2024 were 119 0 million compared to 117 4 million for fiscal year 2023 The 1 increase of 1 6 million was primarily due to
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 Our fresh lemons segment costs and expenses for fiscal year 2024 were 116 3 million compared to 117 6 million for fiscal year 2023 The 1 decrease of 1 3 million was primarily due to
Lemon packing segment revenue is comprised of packing revenue and intersegment packing revenue Our lemon packing segment total net revenues for fiscal year 2024 were 49 3 million compared to 51 7 million for fiscal year 2023 The 5 decrease of 2 4 million was primarily due to decreased volume of lemons packed and sold
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 subcontracted and facility operating costs Our lemon packing costs and expenses for fiscal year 2024 were 42 8 million compared to 45 7 million for fiscal year 2023 The 6 decrease of 2 9 million was primarily due to decreased volume of lemons packed and sold partially offset by increased subcontracted costs
The lemon packing segment included intersegment revenues for fiscal year 2024 of 32 1 million compared to 31 1 million for fiscal year 2023 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
Our avocados segment revenues for fiscal year 2024 were 25 1 million compared to 7 0 million for fiscal year 2023 The 256 increase of 18 1 million was primarily due to alternating years of high and low production due to plant physiology and higher pricing
Costs and expenses associated with our avocados segment include growing and harvest costs Our avocados segment costs and expenses for fiscal year 2024 were 7 3 million compared to 4 0 million for fiscal year 2023 The 82 increase of 3 3 million primarily consisted of the following
Costs and expenses associated with our other agribusiness segment include growing costs harvest costs purchased fruit costs and shipping costs Our other agribusiness costs and expenses for fiscal year 2024 were 23 4 million compared to 25 6 million for fiscal year 2023 The 9 decrease of 2 2 million was primarily due to
Costs and expenses gains in our corporate and other operations for fiscal years 2024 and 2023 were 31 6 million and 1 3 million respectively and include selling general and administrative costs and expenses impairment of intangible asset gain on disposal of assets net and gain on legal settlement not allocated to the operating segments Depreciation and amortization expenses for were 1 3 million for both fiscal years 2024 and 2023
Our primary sources of liquidity are cash and cash flows generated from our operations use of our revolving credit facility sales of assets and distributions from our equity investments 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 To meet working capital demand and investment requirements of our agribusiness and real estate development projects and to supplement operating cash flows we utilize our revolving credit facility to fund agricultural inputs and farm management practices until sufficient returns from crops allow us to repay amounts borrowed 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
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 See Note 11 Long Term Debt and Note 13 Leases for amounts outstanding as of October 31 2024 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
We believe that the cash flows from operations and available borrowing capacity from our existing credit facilities will be sufficient to satisfy our capital expenditures debt service working capital needs and other contractual obligations for the next 12 months We believe our revenue generating operations distributions from equity investments and credit facilities will generate sufficient cash needed to operate beyond the next 12 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
Net cash provided by used in operating activities was 17 9 million and 15 9 million for fiscal years 2024 and 2023 respectively The significant components of our cash flows provided by used in operating activities were as follows
Net income was 7 2 million and 9 1 million for fiscal years 2024 and 2023 respectively The components of net income for fiscal year 2024 compared to net income for fiscal year 2023 primarily consists of a decrease in operating income of 17 0 million and an increase in total other income of 15 1 million
Adjustments provided used 9 0 million and 22 5 million for fiscal years 2024 and 2023 respectively primarily related to depreciation and amortization gain on disposal of assets net stock compensation expense equity in earnings of investments net and cash distributions from equity investments
Changes in operating assets and liabilities provided by used in 1 7 million and 2 5 million of operating cash for fiscal years 2024 and 2023 respectively primarily related to cultural costs accounts payable growers and suppliers payable accrued liabilities payables to related parties and other long term liabilities
The 90 6 million of net cash provided by investing activities for fiscal year 2023 was comprised primarily of net proceeds from sale 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 related to orchard and vineyard development
The 71 9 million of net cash used in financing activities for fiscal year 2023 was comprised primarily of net repayments of long term debt of 65 0 million and common and preferred stock dividends of 5 9 million
We finance our working capital and other liquidity requirements primarily through cash from operations distributions from equity investments and from our Credit Facility with AgWest Farm Credit formerly known as Farm Credit West the Lender which includes the Master Loan Agreement the MLA a revolving credit facility supplement the Revolving Credit Supplement a non revolving credit facility supplement the Non Revolving Credit Supplement and together with the Revolving Credit Supplement the Supplements and a Fixed Interest Rate Agreement which extends principal repayment to July 1 2026 The MLA governs the terms of the Supplements In addition we have Banco de Chile term and COVID 19 loans Additional information regarding these loans can be found in Note 11 Long Term Debt
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 2024 our outstanding borrowings under the AgWest Farm Credit Facility were 40 0 million and we had 75 0 million of availability
On January 31 2023 we sold the Northern Properties which resulted in total net proceeds of 98 4 million The proceeds were used to pay down all of our domestic debt except the Non Revolving Credit Supplement
The MLA subjects us to affirmative and restrictive covenants including among other customary covenants financial reporting requirements requirements to maintain and repair any collateral restrictions on the sale of assets restrictions on the use of proceeds prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets of our business We are also subject to a financial covenant that requires us to maintain compliance with a specific debt service coverage ratio of 1 25 1 0 on an annual basis We were in compliance as of October 31 2024
On April 30 2024 our real estate development joint venture with Lewis closed an additional 554 residential homesites at the Harvest at Limoneira master planned community in Santa Paula CA and we recorded equity in earnings of investments of 17 8 million for LLCB for fiscal year 2024 On June 5 2024 we received a cash distribution of 15 0 million from the joint venture which we used to pay down debt As of October 31 2024 the 50 owned unconsolidated joint venture had 66 9 million of cash and cash equivalents on hand
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 2024 and 2023
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 In order for our real estate development operations to reach their maximum potential benefit to us however we will need to be successful over time in identifying other third party sources of capital to collaborate with us to move those development projects forward While we are frequently in discussions with potential external sources of capital in respect to all of our development projects current market conditions for California real estate projects make it difficult to predict the timing and amounts of future capital that will be required to complete the development of our projects
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 The first phase of the project broke ground to commence mass grading in November 2017 Approved project plans currently include approximately 2 050 residential units and site improvements A total of 1 261 residential units have closed from the project s inception to October 31 2024
In October 2022 we entered into a joint venture with Lewis for the development of our 17 acre East Area I Retained Property We formed LLCB II as the development entity contributed our Retained Property to the joint venture and sold a 50 interest to Lewis for approximately 8 0 million We recorded a gain on the transaction of approximately 4 7 million of which 0 5 million was deferred and recognized in fiscal year 2024
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 and 1 0 million to LLCB II We expect to receive approximately 165 0 million from LLCB LLCB II and East Area II over the next six years of the projects
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 In recent years the market for fresh produce has increased faster than the rate of population growth supported by ongoing trends including greater consumer demand for healthy fresh and convenient foods increased retailer square footage devoted to fresh produce and greater emphasis on fresh produce as a differentiating factor in attracting customers Health conscious consumers are driving much of the growth in demand for fresh produce Over the past several decades the benefits of natural preservative free and organic foods have become an increasingly significant element of the public dialogue on health and nutrition As a result consumption of fresh fruits and vegetables markedly increased Conversely a decrease in demand as was seen during the COVID 19 pandemic as a result of restaurant closures had the impact of reducing our pricing and therefore our revenues and margins
The preparation of our consolidated financial statements in accordance with GAAP requires us to develop critical accounting policies and make certain estimates assumptions and judgments that may affect the reported amounts of assets liabilities revenues and expenses We base our estimates and judgments on historical experience available relevant data and other information that we believe to be reasonable under the circumstances and we continue to review and evaluate these estimates Actual results may materially differ from these estimates under different assumptions or conditions as new or additional information becomes available in future periods For further information on significant accounting policies see discussion in Note 2 Summary of Significant Accounting Policies
We evaluate our real estate development projects held either by us or as included specifically within our investments in LLCB and LLCB II for impairment on an ongoing basis 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 Possible indications of impairment may include events or changes in circumstances affecting the entitlement process litigation zoning government regulation geographical demand for new housing or commercial property and market conditions related to residential or commercial land lots 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 incurred an other than temporary decline in value
We make significant judgments in evaluating each real estate development project as held by us or within our investments in LLCB and LLCB II for possible indications of impairment These judgments may relate to the identification of appropriate and comparable market prices the consideration of changes to legal factors or the business climate the likelihood of successfully completing the entitlement process changes in zoning or government regulation and demand for new housing Changes in these judgments could have a significant impact on real estate development or equity in investments 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 for fiscal years 2024 2023 and 2022
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 If the estimated future cash flows are less than the carrying value of the asset we calculate an impairment loss The impairment loss calculation compares the carrying value of the asset to the asset s estimated fair value which may be based on estimated future cash flows discounted We recognize an impairment loss equal to the amount by which the asset s carrying value exceeds the asset s estimated fair value If we recognize an impairment loss the adjusted carrying amount of the asset will be its new cost basis Restoration of a previously recognized impairment loss is prohibited If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values we may be exposed to impairment losses that could be material to our results of operations
Whenever events or changes in circumstances indicate that the carrying amount of our equity investments in LLCB and LLCB II might not be recoverable then we determine whether an impairment is other than temporary 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
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 Management s assumptions regarding future cash flows from real estate development projects or return on equity of our investments in LLCB and LLCB II have fluctuated in the past due to changes in prices production and costs and are expected to continue to do so in the future as market conditions change
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 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 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 2024 our total debt outstanding under the AgWest Farm Credit Facility was 40 0 million
Based on our level of borrowings as of October 31 2024 a 100 basis points increase in interest rates would not materially increase our interest expense for fiscal year 2025 or the three subsequent fiscal years Additionally a 100 basis points increase in the interest rate would not materially decrease our net income for fiscal year 2025 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 Refer to Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources for additional information
We have audited the accompanying consolidated balance sheets of Limoneira Company and subsidiaries the Company as of October 31 2024 and 2023 the related consolidated statements of operations comprehensive income loss stockholders equity and temporary equity and cash flows for each of the three years in the period ended October 31 2024 and the related notes collectively referred to as the financial statements In our opinion based on our audits and the report of the other auditors the financial statements present fairly in all material respects the financial position of the Company as of October 31 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended October 31 2024 in conformity with accounting principles generally accepted in the United States of America
We did not audit the financial statements of Limoneira Lewis Community Builders LLC LLCB the Company s investment in which is accounted for by use of the equity method The accompanying consolidated financial statements of the Company include before the basis difference and related amortization discussed in Note 7 its equity in investment in LLCB of 63 581 000 and 58 282 000 as of October 31 2024 and 2023 respectively and its equity earnings in LLCB of 20 304 000 5 851 000 and 1 015 000 for the years ended October 31 2024 2023 and 2022 respectively The financial statements of LLCB were audited by other auditors whose report has been furnished to us and our opinion insofar as it relates to the amounts included for the Company s equity in investment and equity earnings in LLCB is based solely on the report of the other auditors
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of October 31 2024 based on the criteria established in
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 23 2024 expressed an unqualified opinion on the Company s internal control over financial reporting based on our audit
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
The Company s evaluation of real estate development projects held either by the Company or as included specifically within its investment in LLCB 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 Possible indications of impairment may include events or changes in circumstances affecting the entitlement process litigation zoning government regulation geographical demand for new housing or commercial property and market conditions related to residential or commercial land lots When events or changes in circumstances exist the Company further evaluates 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 its real estate development or b determining if its equity in investment has incurred an other than temporary decline in value
The Company makes significant judgments in evaluating each real estate development project as held by them or within its investment in LLCB for possible indications of impairment These judgments may relate to the identification of appropriate and comparable market prices the consideration of changes to legal factors or the business climate the likelihood of successfully completing the entitlement process changes in zoning or government regulation and demand for new housing Changes in these judgments could have a significant impact on real estate development or equity in investments Real estate development assets held by the Company were 10 201 000 and equity in investments was 81 546 000 as of October 31 2024 of which 67 962 000 was related to LLCB For the year ended October 31 2024 no impairment loss has been recognized on any real estate development and no other than temporary impairment has been recognized on the Company s equity in LLCB
We identified the significant judgments made by management in evaluating real estate development assets held by the Company and equity in investment in LLCB for possible indicators of impairment as a critical audit matter This required a high degree of auditor judgment and an increased extent of effort including the need to involve our fair value specialists when performing audit procedures to evaluate the reasonableness of management s estimates and assumptions when determining whether events or changes in circumstances have occurred indicating that the carrying amount of real estate development assets held by the Company and equity in investment in LLCB may not be recoverable and whether management appropriately identified impairment indicators
Our audit procedures related to the evaluation of real estate development assets held by the Company and equity in investment in LLCB for possible indications of impairment included the following among others
We tested the effectiveness of the controls over management s identification of possible circumstances that may indicate that real estate development assets held by the Company or equity in investment in LLCB is no longer recoverable including controls over management s evaluation of the entitlement process litigation zoning government regulation geographical demand and market conditions
Searching for adverse asset specific and or market conditions by reviewing publicly available information on land values in the surrounding regions of the development periodicals and news information relating to the Southern California real estate market
Obtaining information from legal counsel and performing inquiries with management in order to evaluate any changes in the status of litigation matters affecting the real estate development assets and the potential impact on the ability to recover the accumulated costs including any relevant government regulations and or other matters impacting the entitlement process
Series B 2 Convertible Preferred Stock 100 00 par value 10 000 shares authorized 9 300 shares issued and outstanding at October 31 2024 and October 31 2023 4 dividend rate on liquidation value of 1 000 per share
Limoneira Company together with its consolidated subsidiaries the Company engages primarily in growing citrus and avocados harvesting citrus and packing marketing and selling citrus The Company is also engaged in residential rentals and other rental operations and real estate development activities
The Company markets and sells citrus directly to food service wholesale and retail customers throughout the United States Canada Asia and certain other international markets Through fiscal year 2023 the Company was a member of Sunkist Growers Inc an agricultural marketing cooperative and sold a portion of its oranges specialty citrus and other crops to Sunkist licensed and other third party packinghouses
The consolidated financial statements include the accounts of the Company and the accounts of all the subsidiaries and investments in which the Company holds a controlling interest The consolidated financial statements represent the consolidated balance sheets statements of operations statements of comprehensive income loss statements of stockholders equity and temporary equity and statements of cash flows of Limoneira Company and consolidated subsidiaries Intercompany balances and transactions have been eliminated in consolidation The Company considers the criteria established under the Financial Accounting Standards Board FASB
The preparation of financial statements in conformity with U S generally accepted accounting principles GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period Actual results could differ from those estimates
The Company grants credit in the course of its operations to cooperatives companies and lessees of the Company s facilities The Company performs periodic credit evaluations of its customers financial condition and generally does not require collateral The Company provides allowances on its receivables as required based on accounts receivable aging and other factors As of October 31 2024 and 2023 the allowances totaled 355 000 and 260 000 respectively Credit losses were 235 000 for fiscal year 2024 and immaterial for fiscal years 2023 and 2022
Concentrations of credit risk with respect to revenues and accounts receivable are limited due to a large diverse customer base One individual customer represented 14 of revenue for fiscal year 2024 One individual customer represented 20 of accounts receivable net as of October 31 2024
Lemons procured from third party growers were 72 54 and 52 of the Company s domestic lemon supply for fiscal years 2024 2023 and 2022 respectively Four third party growers and suppliers were 27 14 11 and 11 of growers and suppliers payable as of October 31 2024
The Company maintains its cash in federally insured financial institutions The account balances at these institutions periodically exceed Federal Deposit Insurance Corporation FDIC insurance coverage and as a result there is a concentration of risk related to amounts on deposit in excess of FDIC insurance coverage
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 Harvest costs are comprised of labor and equipment expenses incurred to harvest and deliver crops to the packinghouses
Certain of the Company s crops have distinct growing periods and distinct harvest and selling periods each of which lasts approximately four to eight months During the growing period cultural costs are capitalized as they are associated with benefiting and preparing the crops for the harvest and selling period During the harvest and selling period harvest costs and cultural costs are expensed when incurred and capitalized cultural costs are amortized as components of agribusiness costs and expenses
Due to climate growing conditions and the types of crops grown certain of the Company s other crops may be harvested and sold on a year round basis Accordingly the Company does not capitalize cultural costs associated with these crops and therefore such costs as well as harvest costs associated with these crops are expensed to operations when incurred as components of agribusiness costs and expenses
Most cultural costs including amortization of capitalized cultural costs and harvest costs are associated with and charged to specific crops Certain other costs such as property taxes indirect labor including farm supervision and management and irrigation that benefit multiple crops are allocated to crops on a per acre basis
Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax bases of assets and liabilities that will result in taxable or deductible amounts in the future Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income A valuation allowance is established when necessary to reduce deferred income tax assets to the amount expected to be realized
Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 likelihood of being realized upon ultimate settlement
Property plant and equipment is stated at original cost net of accumulated depreciation Depreciation is computed using the straight line method at rates based upon the estimated useful lives of the related assets as follows in years
Costs of planting and developing orchards are capitalized until the orchards become commercially productive Planting costs consist primarily of the costs to purchase and plant nursery stock Orchard development costs consist primarily of maintenance costs of orchards such as cultivation pruning irrigation labor pest control and fertilization and interest costs during the development period The Company ceases the capitalization of costs and commences depreciation when the orchards become commercially productive and orchard maintenance costs are accounted for as cultural costs as described above
Interest is capitalized on real estate development projects and significant construction in progress using the weighted average interest rate during the fiscal year Capitalized interest is included in property plant and equipment equity in investments and real estate development assets in the Company s consolidated balance sheets
The Company capitalizes the planning entitlement construction development costs and interest associated with its various real estate projects Costs that are not capitalized which include property maintenance and repairs general and administrative and marketing expenses are expensed as incurred A real estate development project is considered substantially complete upon the cessation of construction and development activities Once a project is substantially completed future costs are expensed as incurred The Company capitalized costs related to its real estate projects of 214 000 and 281 000 for fiscal years 2024 and 2023 respectively
Investments in unconsolidated joint ventures in which the Company has significant influence but less than a controlling interest or is not the primary beneficiary if the joint venture is determined to be a Variable Interest Entity VIE are accounted for under the equity method of accounting and accordingly are adjusted for capital contributions distributions capitalized interest and the Company s equity in net earnings or loss of the respective joint venture The Company evaluates equity method investments for impairment whenever events or changes in circumstances exist that may indicate the investments are no longer recoverable or have incurred an other than temporary decline in value
Intangible assets consist primarily of customer relationships trade names and trademarks and a non competition agreement The Company s definite life intangible assets are being amortized on a straight line basis over their estimated lives of eight years Acquired water and mineral rights are indefinite life assets not subject to amortization Assets held for sale are carried at the lower of cost or fair value less estimated cost to sell
The Company evaluates long lived assets including its property and equipment real estate development projects and definite life intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable If the estimated fair value or undiscounted future cash flows from the use of an asset are less than the carrying value of that asset a write down is recorded to reduce the carrying value of the asset to its estimated fair value The Company evaluates its indefinite life intangible assets annually or whenever events or changes in circumstances indicate an impairment of the assets value may exist
Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable Goodwill impairment is tested at the reporting unit level which is defined as an operating segment or one level below the operating segment The annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit s fair value however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary Goodwill impairment testing involves significant judgment and estimates
Accounts receivable accounts payable growers and suppliers payable and accrued liabilities reported on the Company s consolidated balance sheets approximate their fair values due to the short term nature of the instruments
Based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities the fair value of long term debt is approximately equal to its carrying amount as of October 31 2024 and 2023
Certain reclassifications have been made to the prior years consolidated financial statements to conform to the current presentation The Company reclassified shipping and other revenue and shipping costs from the lemon packing reportable segment to the other agribusiness reportable segment
Comprehensive income loss represents all changes in a company s net assets except changes resulting from transactions with stockholders Other comprehensive income or loss includes foreign currency translation items and defined benefit pension items Accumulated other comprehensive loss is reported as a component of the Company s stockholders equity
The Company has foreign subsidiaries whose functional currencies are the Chilean Peso Their balance sheets are translated to U S dollars at exchange rates in effect at the balance sheet date and their income statements are translated at average exchange rates during the reporting period The resulting foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive loss income
The Company s foreign subsidiaries incurred aggregate foreign exchange transaction losses of approximately 123 000 for fiscal year 2024 and 204 000 for both fiscal years 2023 and 2022 These losses are included in selling general and administrative expenses in the consolidated statements of operations
and recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services To achieve that core principle the Company applies the following steps
The Company determines the appropriate method by which it recognizes revenue by analyzing the nature of the products or services being provided as well as the terms and conditions of contracts or arrangements entered into with its customers The Company accounts for a contract when it has approval and commitment from both parties the rights of the parties are identified payment terms are identified the contract has commercial substance and collectability of consideration is probable A contract s transaction price is allocated to each distinct good or service i e performance obligation identified in the contract and each performance obligation is valued based on its estimated relative standalone selling price
The Company recognizes the majority of its revenue at a point in time when it satisfies a performance obligation and transfers control of the product to the respective customer The amount of revenue that is recognized is based on the transaction price which represents the invoiced amount and includes estimates of variable consideration such as allowances for estimated customer discounts or concessions where applicable The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period
Revenue from lemon sales is generally recognized at a point in time when the customer takes control of the fruit from the Company s packinghouse which aligns with the transfer of title to the customer The Company has elected to treat any shipping and handling costs incurred after control of the goods has been transferred to the customer as agribusiness costs
The Company s avocados are packed and sold by third party packinghouses The Company s arrangements with its third party packinghouses are such that the Company is the producer and supplier of the product and the third party packinghouses are the Company s customers The Company controls the product until it is delivered to the third party packinghouses at which time control of the product is transferred to the third party packinghouses and revenue is recognized
Farm management revenue is recorded when services are provided for farming management orchard development accounting and operations Revenue is recorded gross for all expense reimbursements plus a fee for the services provided
Revenue from crop insurance proceeds is recorded when the amount can be reasonably determined and upon establishment of the present right to payment There were no agribusiness revenues from crop insurance proceeds for fiscal year 2024 The Company recorded agribusiness revenues from crop insurance proceeds of 769 000 and 449 000 for fiscal years 2023 and 2022 respectively
The Company enters into leases as a lessee generally for agricultural land packinghouse facilities equipment and vehicles The Company determines if an arrangement is a lease or contains a lease at inception Operating and finance leases are included in other assets accrued liabilities and other long term liabilities on its consolidated balance sheets Lease right of use ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease measured on a discounted basis Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date The Company uses either its incremental borrowing rate based on the information available at commencement date or the rate implicit in the lease if known in determining the present value of future payments
Operating lease expense for minimum lease payments is recognized on a straight line basis over the lease term Leases with an initial term of 12 months or less are not recorded on the balance sheet as the Company has elected to recognize lease expense for these leases on a straight line basis over the lease term The Company had material leases with related parties which are further described in Note 15 Related Party Transactions
Certain of the Company s agricultural land agreements contain variable costs based on a percentage of the operating results of the leased property Such variable lease costs are expensed as incurred These land agreements also contain costs for non lease components such as water usage which the Company accounts for separately from the lease components For all other agreements the Company generally combines lease and non lease components in calculating the ROU assets and lease liabilities See Note 13 Leases for additional information
Leases in which the Company acts as the lessor include land residential and commercial units and are all classified as operating leases Certain of the Company s contracts contain variable income based on a percentage of the operating results of the leased asset Certain of the Company s contracts contain non lease components such as water utilities and common area services The Company has elected to not separate lease and non lease components for its lessor arrangements and the combined component is accounted for entirely under ASC 842
The underlying asset in an operating lease arrangement is carried at depreciated cost within property plant and equipment net on the consolidated balance sheets Depreciation is calculated using the straight line method over the useful life of the underlying asset The Company recognizes operating lease revenue on a straight line basis over the lease term
Basic net income loss per common share is calculated using the weighted average number of common shares outstanding during the period without consideration of the dilutive effect of conversion of preferred stock Diluted net income loss per common share is calculated using the weighted average number of common shares outstanding during the period plus the dilutive effect of conversion of unvested restricted stock and preferred stock
Diluted net income loss per common share is calculated using the more dilutive method of either the two class method or the treasury stock method Unvested stock based compensation awards that contain non forfeitable rights to dividends as participating shares are included in computing earnings per share The Company s unvested restricted stock awards qualify as participating shares
The Company sponsored a defined benefit retirement plan the Plan that was frozen in June 2004 and no future benefits accrued to participants subsequent to that time In fiscal year 2021 the Company terminated the Plan effective December 31 2021 On November 4 2022 the Company entered into an agreement with Principal Life Insurance Company for the purchase of an annuity contract in connection with the Plan termination On November 10 2022 the annuity contract was purchased for 12 617 000 payable with Plan assets and a 2 500 000 cash payment from the Company
ASU 2023 07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses the chief operating decision maker CODM and how the CODM uses the reported measure s of segment profit or loss This amendment also requires that a public entity provide all annual disclosures about a reportable segment s profit or loss and assets currently required by FASB Accounting Standards Codification Topic 280 Segment Reporting in interim periods
The ASU is effective for fiscal years beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 Early adoption is permitted A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements The Company is currently evaluating the impact of this guidance on its consolidated financial statements
ASU 2023 09 requires disaggregated information about a reporting entity s effective tax rate reconciliation as well as information on income taxes paid The ASU is effective for public business entities with annual periods beginning after December 15 2024 with early adoption permitted The Company is currently evaluating the impact of this guidance on its consolidated financial statements
which requires registrants to provide certain climate related information in their registration statements and annual reports The rules require information about a registrant s climate related risks that are reasonably likely to have a material impact on its business results of operations or financial condition These requirements are effective for the Company in various fiscal years starting with its fiscal year beginning November 1 2026 On April 4 2024 the SEC determined to voluntarily stay the final rules pending certain legal challenges The Company is currently evaluating the impact of these final rules on its consolidated financial statements and disclosures
ASU 2024 03 requires public companies to disclose in the notes to financial statements specified information about certain costs and expenses at each interim and annual reporting period Specific disclosures include the amounts of a purchases of inventory b employee compensation c depreciation d intangible asset amortization and e depreciation depletion and amortization recognized as part of oil and gas producing activities or other amounts of depletion expense included in each relevant expense caption as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively Additionally companies will need to disclose the total amount of selling expenses and in annual reporting periods an entity s definition of selling expenses
This ASU is effective for public business entities for annual reporting periods beginning after December 15 2026 and interim reporting periods beginning after December 15 2027 Early adoption is permitted A public business entity should apply ASU 2024 03 prospectively to financial statements issued for reporting periods beginning after the effective date but may elect to apply the ASU retrospectively to any or all prior periods presented in the financial statements The Company is currently evaluating the impact of this guidance on its consolidated financial statements
In October 2022 the Company 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 a purchase price of approximately 100 405 000 On January 25 2023 the Board approved the Agreement creating a binding agreement of the Company to sell the Northern Properties and the transaction closed on January 31 2023 During the quarter ended April 30 2023 the purchase price was decreased by 397 000 for reimbursement of certain cultural costs and prepaid expenses resulting in a final purchase price of 100 008 000 After transaction costs the Company received net proceeds of 98 411 000
The proceeds were used to pay down all of the Company s domestic debt except the AgWest Farm Credit 40 000 000 non revolving line of credit The Northern Properties component including an allocation of interest expense related to the debt directly repaid through the transaction had a pretax loss of 1 667 000 and 1 236 000 for fiscal years 2023 and 2022 respectively
On January 31 2023 the Company entered into a Farm Management Agreement FMA with an affiliate of PGIM to provide farming management and operations services related to the Northern Properties The FMA had an initial term expiring March 31 2024 and thereafter continues from year to year unless earlier terminated under the terms of the FMA Further on January 31 2023 the Company 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
In December 2023 the Company sold 12 acres of real property located in Yuma Arizona for a sales price of 775 000 After transaction and closing costs the Company recorded a gain on disposal of assets of approximately 187 000 during fiscal year 2024
In April 2023 the Company determined that citrus farming operations were economically unviable on 670 acres of leased agricultural land at the Cadiz Ranch As a result the Company ceased farming operations at the Cadiz Ranch disposed of the related property plant and equipment and recorded a loss on disposal of assets of 9 012 000 during fiscal year 2023
In October 2022 the Company sold the Oxnard Lemon property and packing facility located in Ventura County California The Company received net proceeds of 19 144 000 and recognized a gain of approximately 846 000 during fiscal year 2022 Concurrent with the closing of the sale the Company entered into a lease agreement to continue use of the property as a lessee for a period of 36 months from the closing date with extension options for an additional 24 months
In fiscal year 2005 the Company began capitalizing the costs of two real estate development projects east of Santa Paula California for the development of 550 acres of land into residential units commercial buildings and civic facilities In November 2015 the Transaction Date the Company entered into a joint venture with The Lewis Group of Companies Lewis for the residential development of its East Area I real estate development project To consummate the transaction the Company formed Limoneira Lewis Community Builders LLC LLCB as the development entity contributed its East Area I property to LLCB and sold a 50 interest to Lewis for 20 000 000
The Company and LLCB also entered into a Retained Property Development Agreement on the Transaction Date the Retained Property Agreement Under the terms of the Retained Property Agreement LLCB transferred certain contributed East Area I property which was entitled for commercial development back to the Company the Retained Property and arranged for the design and construction of certain improvements to the Retained Property subject to certain reimbursements by the Company The balance in East Area II includes estimated costs incurred by and reimbursable to LLCB of 3 444 000 as of October 31 2024 and 2023 which is included in payables to related parties
In January 2018 LLCB entered into a 45 000 000 unsecured Line of Credit Loan Agreement and Promissory Note the Loan with Bank of America N A to fund early development activities Effective as of February 22 2023 the Loan maturity date was extended to February 22 2024 and the maximum borrowing amount was reduced to 35 000 000 As of February 1 2023 the interest rate on the Loan transitioned from the London Interbank Offered Rate LIBOR to the Bloomberg Short Term Bank Yield Index rate BSBY plus 2 85 and was payable monthly Effective as of February 22 2024 the Loan maturity date was extended to August 22 2024 and the interest rate transitioned from the BSBY to the Secured Overnight Financing Rate SOFR plus 2 85 As of May 3 2024 the Loan had no outstanding balance and was cancelled As of October 31 2024 LLCB had cash and cash equivalents of 66 851 000
In February 2018 the Company and certain principals from Lewis guaranteed the obligations under the Loan The guarantors were jointly and severally liable for all Loan obligations in the event of default by LLCB Additionally a Reimbursement Agreement was executed between the Lewis guarantors and the Company which provided for unpaid liabilities of LLCB to be shared pro rata by the Lewis guarantors and the Company in proportion to their percentage interest in LLCB The guarantee continued in effect until all of the Loan obligations were fully paid and the Loan terminated The 1 080 000 estimated value of the guarantee was recorded in the Company s consolidated balance sheets and upon cancellation of the Loan in May 2024 was removed from other long term liabilities and the corresponding value in equity in investments
In October 2022 the Company entered into a joint venture with Lewis for the development of the Retained Property The Company formed LLCB II LLC LLCB II as the development entity contributed the Retained Property to the joint venture and sold a 50 interest to Lewis for 7 975 000 After transaction costs the Company received net proceeds of 7 917 000 and recorded a gain on the transaction of 4 652 000 of which 465 000 was deferred and recognized in fiscal year 2024 and 4 187 000 was recognized in fiscal year 2022 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 The Company made contributions of 480 000 and 525 000 to LLCB II in fiscal year 2024 and 2023 respectively
Through October 31 2024 LLCB closed on lot sales representing 1 261 residential units since inception including 554 residential units in fiscal year 2024 In June 2024 the Company received a cash distribution of 15 005 000 from LLCB
In fiscal year 2020 the Company entered into an agreement to sell its Sevilla property for 2 700 000 which closed in November 2022 After transaction and other costs the Company received cash proceeds of approximately 2 577 000 and recorded an immaterial loss on disposal of assets for fiscal year 2023
In December 2017 the Company sold its Centennial property with a net book value of 2 983 000 for 3 250 000 The Company received cash and a 3 000 000 promissory note secured by the property for the balance of the purchase In fiscal year 2022 the promissory note was paid in full and the deferred gain of 161 000 was recorded in gain on disposal of assets net
The Company has a 1 3 interest in Limco Del Mar Ltd Del Mar as a general partner and a 26 8 interest as a limited partner Based on the terms of the partnership agreement the Company may be removed as general partner without cause from the partnership upon the vote of the limited partners owning an aggregate of 50 or more interest in the partnership Since the Company has significant influence but less than a controlling interest the Company s investment in Del Mar is accounted for using the equity method of accounting
The Company provides Del Mar with farm management orchard land development and accounting services and received farm management revenue and expense reimbursements of 128 000 206 000 and 202 000 for fiscal years 2024 2023 and 2022 respectively Del Mar markets lemons through the Company pursuant to its customary marketing agreements and the amount of lemons procured from Del Mar was 1 182 000 1 161 000 and 1 568 000 for fiscal years 2024 2023 and 2022 respectively Fruit proceeds due to Del Mar were 527 000 and 347 000 as of October 31 2024 and 2023 respectively and are included in payables to related parties and growers and suppliers payable in the accompanying consolidated balance sheets respectively
In May 2007 the Company and an individual formed the Romney Property Partnership Romney for the purpose of owning and leasing an office building and adjacent lot in Santa Paula California The Company paid 489 000 in 2007 for 75 interest in Romney The terms of the partnership agreement affirm the status of the Company as a noncontrolling investor in the partnership since the Company cannot exercise unilateral control over the partnership Since the Company has significant influence but less than a controlling interest the Company s investment in Romney is accounted for using the equity method of accounting Net profits losses and cash flows of Romney are shared by the Company which receives 75 and the individual who receives 25
The Company currently has a 47 equity interest in Rosales S A Rosales of which 35 was acquired in fiscal year 2014 and an additional 12 interest was acquired with the purchase of Fruticola Pan de Azucar S A PDA in fiscal year 2017 Rosales is a citrus packing marketing and sales business located in La Serena Chile In addition the Company has the right to acquire the interest of the majority shareholder of Rosales upon death or disability of Rosales general manager for the fair value of the interest on the date of the event as defined in the shareholders agreement Since the Company has significant influence but less than a controlling interest the Company s investment in Rosales is accounted for using the equity method of accounting
Rosales functional currency is the Chilean Peso The following financial information has been translated to U S dollars In addition as a result of the Company s acquisition of its equity interest basis differences were identified between the historical cost of the net assets of Rosales and the proportionate fair value of the net assets acquired Such basis differences aggregated to 1 683 000 on the acquisition date and are primarily comprised of intangible assets including 343 000 of equity method goodwill An additional 925 000 of basis differences were identified with the February 2017 PDA acquisition including 143 000 of equity method goodwill The 2 122 000 in basis differences exclusive of goodwill is being amortized over the estimated life of the underlying intangible assets as a reduction in the equity investment and an expense included in equity in earnings of investments Amortization amounted to 76 000 87 000 and 118 000 for fiscal years 2024 2023 and 2022 respectively and is estimated to be immaterial thereafter
The Company recognized lemon and orange sales to Rosales of 4 541 000 4 581 000 and 3 615 000 for fiscal years 2024 2023 and 2022 respectively The aggregate amount of lemons and oranges procured from Rosales was 5 387 000 5 826 000 and 3 821 000 for fiscal years 2024 2023 and 2022 respectively Net amounts due to from Rosales were 629 000 and 626 000 as of October 31 2024 and 2023 respectively and are included in payables to related parties and in receivables other from related parties
As described in Note 6 Real Estate Development the Company has a joint venture with Lewis for the residential development of its East Area I real estate development project In addition to the assessment performed by the Company of its investment in LLCB under the requirements of Regulation S X Rule 4 08 g the Company also assessed its investment in LLCB under the requirements of Regulation S X Rule 3 09 b LLCB was deemed significant for the years ended October 31 2024 and 2023 but was not significant for the year ended October 31 2022 Therefore the audited financial statements of LLCB for the years ended October 31 2024 2023 and 2022 are provided as exhibits to this document to comply with this rule Additionally there is a basis difference between the Company s historical investment in the project and the amount recorded in members capital by LLCB of 63 581 000 as of October 31 2024 The basis difference of 4 381 000 as of October 31 2024 was primarily comprised of capitalized interest and certain other costs incurred by Limoneira Company during the development period This basis difference is being amortized as lots are sold utilizing the relative sales value method and the amount amortized totaled 2 545 000 717 000 and 77 000 for fiscal years 2024 2023 and 2022 respectively The Company s share of LLCB s net income prior to basis amortization was 20 304 000 5 851 000 and 1 015 000 for fiscal years 2024 2023 and 2022 respectively
As described in Note 6 Real Estate Development in October 2022 the Company formed a joint venture with Lewis for the residential development of its Retained Property Control is shared with Lewis therefore the Company s investment in LLCB II is accounted for using the equity method of accounting
Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable The Company concluded that no potential impairment indicators existed during any interim period and performed its annual assessment of goodwill impairment as of July 31 2024 with no impairment noted The Company did not incur any goodwill impairment losses for fiscal years 2024 2023 or 2022 as the estimated fair values of its reporting units were in excess of their carrying values
The Company s investments in various not for profit mutual water companies provide it with the right to receive a proportionate share of water from each of the not for profit mutual water companies that have been invested in and do not constitute voting shares and or rights In January 2023 the Company sold an investment in a mutual water company with a net book value of 1 320 000 as part of the Northern Properties sale described in Note 3 Asset Sales and Disposals Amounts included in other assets in the consolidated balance sheets as of October 31 2024 and 2023 were 6 229 000 and 5 703 000 respectively
AgWest Farm Credit revolving and non revolving lines of credit the interest rate of the revolving line of credit is variable based on the one month SOFR which was 4 84 at October 31 2024 plus 1 78 The interest rate for the 40 0 million outstanding balance of the non revolving line of credit is fixed at 3 57 through July 1 2025 and variable thereafter Interest is payable monthly and the principal is due in full on July 1 2026
The Company entered into a Master Loan Agreement the MLA with AgWest Farm Credit formerly known as Farm Credit West the Lender dated June 1 2021 together with a revolving credit facility supplement the Revolving Credit Supplement a non revolving credit facility supplement the Non Revolving Credit Supplement and together with the Revolving Credit Supplement the Supplements and an agreement to convert to a fixed interest rate for a period of time as described in the table above Fixed Interest Rate Agreement The MLA governs the terms of the Supplements
In March 2020 the Company entered into a revolving equity line of credit promissory note and loan agreement with the Lender for a 15 000 000 Revolving Equity Line of Credit the RELOC secured by a first lien on the Windfall Investors LLC property The RELOC featured a 3 year draw period followed by 20 years of fully amortized loan payments On March 31 2023 the draw period expired and the RELOC was closed as there was no balance outstanding
The Supplements provide aggregate borrowing capacity of 115 000 000 comprised of 75 000 000 under the Revolving Credit Supplement and 40 000 000 under the Non Revolving Credit Supplement As of October 31 2024 the Company s outstanding borrowings under the Supplements were 40 000 000 and it had 75 000 000 available to borrow
The interest rate in effect under the Revolving Credit Supplement automatically adjusts on the first day of each month The interest rate for any amount outstanding under the Revolving Credit Supplement was based on the one month LIBOR plus or minus an applicable margin As of January 1 2023 the rate transitioned from LIBOR to SOFR The applicable margin ranges from 1 68 to 2 28 depending on the ratio of current assets plus the remaining available commitment divided by current liabilities On each anniversary of July 1 the Company has the option to convert the interest rate in use under the Revolving Credit Supplement from the preceding SOFR based calculation to a variable interest rate The Company may prepay any amounts outstanding under the Revolving Credit Supplement without penalty
The interest rate in effect under the Non Revolving Credit Supplement is a fixed interest rate of 3 57 per year until July 1 2025 the Fixed Rate Term Thereafter the interest rate will convert to a variable interest rate established by the Lender corresponding to the applicable interest rate group The Company may not prepay any amounts under the outstanding Non Revolving Credit Supplement during the Fixed Rate Term Thereafter the Company may prepay any amounts outstanding under the Non Revolving Credit Supplement provided that a fee equal to 0 50 of the amount prepaid and any other cost or loss suffered by the Lender must be paid with any prepayment
All indebtedness under the MLA including any indebtedness under the Supplements is secured by a first lien on Company owned stock or participation certificates Company funds maintained with the Lender the Lender s unallocated surplus certain of the Company s agricultural properties certain of the Company s building fixtures and improvements and investments in mutual water companies associated with the pledged agricultural properties The MLA includes customary default provisions Should an event of default occur the Lender at its option may declare all or any portion of the indebtedness under the MLA to be immediately due and payable without demand notice of nonpayment protest or prior recourse to collateral and terminate or suspend the Company s right to draw or request funds on any loan or line of credit
The MLA subjects the Company to affirmative and restrictive covenants including among other customary covenants financial reporting requirements requirements to maintain and repair any collateral restrictions on the sale of assets restrictions on the use of proceeds prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets of the Company s business The Company is also subject to a financial covenant that requires it to maintain compliance with a specific debt service coverage ratio of 1 25 1 0 on an annual basis The Company was in compliance as of October 31 2024
Interest is capitalized on non bearing orchards real estate development projects and significant construction in progress The Company capitalized interest of 788 000 864 000 and 582 000 for fiscal years ended 2024 2023 and 2022 respectively Capitalized interest is included in property plant and equipment real estate development assets and equity in investments in the Company s consolidated balance sheets
The Company enters into leasing transactions in which it rents certain of its assets and the Company is the lessor These lease contracts are typically classified as operating leases with remaining terms ranging from one month to 18 years with various renewal terms available All of the residential rentals have month to month lease terms
The Company enters into leasing transactions in which the Company is the lessee These lease contracts are classified as either operating or finance leases The Company s lease contracts are generally for agricultural land packinghouse facilities equipment and vehicles with remaining lease terms ranging from one to four years with various term extensions available Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight line basis over the lease term Lease costs are primarily included in agribusiness costs and expenses in the Company s consolidated statements of operations
Future minimum lease payments under non cancellable leases are as follows in thousands which excludes 1 315 000 of operating and finance lease payments for leases that have been signed but not commenced
In addition to operating and finance lease commitments the Company also has financing transactions which do not meet the definition of a lease with minimum future payments of 473 000 for fiscal year 2025 452 000 for fiscal year 2026 and 37 000 for fiscal year 2027
Basic net income loss per common share is calculated using the weighted average number of common shares outstanding during the period without consideration of the dilutive effect of conversion of preferred stock Diluted net income loss per common share is calculated using the weighted average number of common shares outstanding during the period plus the dilutive effect of conversion of unvested restricted stock and preferred stock The Series B and Series B 2 convertible preferred shares were anti dilutive for fiscal years 2024 2023 and 2022 The computations for basic and diluted net income loss per common share are as follows for the fiscal years ended October 31 in thousands except per share data
Diluted net income loss per common share is calculated using the more dilutive method of either the two class method or the treasury stock method Unvested stock based compensation awards that contain non forfeitable rights to dividends as participating shares are included in computing earnings per share The Company s unvested restricted stock awards qualify as participating shares Diluted net income loss per common share was calculated under the two class method for fiscal years 2024 2023 and 2022
Mutual water companies The Company has representation on the boards of directors of the mutual water companies in which the Company has investments as well as other water districts Refer to Note 9 Other Assets The Company recorded capital contributions purchased water and water delivery services and had water payments due to the mutual water companies and districts
Cooperative association The Company has representation on the board of directors of a non profit cooperative association that provides pest control services for the agricultural industry The Company purchased services and supplies from and had immaterial payments due to the cooperative association
Calavo Through January 2022 the Company had representation on the board of directors of Calavo Calavo owned common stock of the Company and the Company paid dividends on such common stock to Calavo Additionally the Company leases office space to Calavo As of February 2022 Calavo is no longer a related party
Cadiz Fenner WAM A member of the Company s board of directors served as the CEO President and a member of the board of directors of Cadiz Inc through December 31 2023 As of January 1 2024 Cadiz Inc is no longer a related party In 2013 the Company entered a long term lease agreement the Lease with Cadiz Real Estate LLC Cadiz a wholly owned subsidiary of Cadiz Inc and leased 670 acres located in eastern San Bernardino County California In 2016 Cadiz assigned this lease to Fenner Valley Farms LLC Fenner a subsidiary of Water Asset Management LLC WAM As of the date of the lease assignment the Company no longer had any related party transactions with Cadiz An affiliate of WAM is the holder of 9 300 shares of the Company s Series B 2 convertible preferred stock and the Company paid dividends to such affiliate The annual base rent was equal to the sum of 200 per planted acre and 20 of gross revenues from the sale of harvested lemons less operating expenses not to exceed 1 200 per acre per year Upon the adoption of ASC 842 the Company recorded a ROU asset and corresponding lease liability which were written off in fiscal year 2023 upon cessation of farming operations
Yuma Mesa Irrigation and Drainage District YMIDD The Company has representation on the board of directors of YMIDD The Company purchased water from YMIDD and had no amounts payable to them for such purchases Additionally the Company received fallowing revenue from YMIDD and has a receivable outstanding
FGF The Company has a receivable from FGF for lemon sales and the sale of packing supplies and a payable due to FGF for fruit purchases and services The Company records revenue related to the licensing of intangible assets to FGF The Company leases the Santa Clara ranch to FGF and records rental revenue related to the leased land
Rosales The Company has an equity interest in Rosales as further described in Note 7 Equity in Investments The Company recognizes lemon and orange sales to Rosales procures lemons and oranges from Rosales and has amounts due to and due from Rosales for such sales and purchases
Del Mar The Company has an interest in Del Mar as a general partner and as a limited partner as further described in Note 7 Equity in Investments The Company provides Del Mar with farm management services and Del Mar markets lemons through the Company The Company has a payable due to Del Mar for such lemon procurement
Deferred income taxes reflect the net of temporary differences between the carrying amount of the assets and liabilities for financial reporting and income tax purposes The components of deferred income tax assets as of October 31 are as follows in thousands
The Company periodically evaluates the recoverability of the deferred tax assets The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized In making such a determination the Company considers all available positive and negative evidence including future reversals of existing taxable temporary differences projected future taxable income tax planning strategies and results of recent operations The Company recorded a valuation allowance of 1 973 000 on the net deferred tax assets of its subsidiaries in Argentina Chile and Holland as of October 31 2024 as the Company does not believe it is more likely than not that these deferred tax assets will be realized due to the recent history of cumulative pre tax book losses and lack of objectively verifiable future sources of taxable income
As of October 31 2024 the Company recorded a deferred tax asset of 1 645 000 related to its state and foreign net operating loss carryforwards The net operating losses begin to expire as follows in thousands
The provision for income taxes differs from the amount of income tax determined by applying the U S statutory federal income tax rate to pretax income as a result of the following differences for the fiscal years ended October 31 in thousands
As of October 31 2024 and 2023 the Company had no unrecognized tax benefits The Company files income tax returns in the U S California Arizona Chile Argentina and Holland The Company is no longer subject to significant U S state and Chilean income tax examinations for years prior to the statutory periods of three years for federal four years for state and three years for Chilean tax jurisdictions The Company recognizes interest expense and penalties related to income tax matters as a component of income tax expense There was no accrued interest or penalties associated with uncertain tax positions as of October 31 2024
The Limoneira Company Retirement Plan the Plan was a noncontributory defined benefit single employer pension plan which provided retirement benefits for all eligible employees Benefits paid by the Plan were calculated based on years of service highest five year average earnings primary Social Security benefit and retirement age Effective June 2004 the Company froze the Plan and no additional benefits accrued to participants subsequent to that date The Plan was administered by Principal Bank and Mercer Human Resource Consulting In fiscal year 2021 the Company terminated the Plan effective December 31 2021
During fiscal year 2023 the Company made funding contributions of 2 500 000 to fully fund and settle the plan obligations 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 There are no remaining benefit obligations or plan assets and the remaining accumulated other comprehensive loss was fully recognized
The following tables set forth the Plan s net periodic benefit cost changes in benefit obligation and Plan assets funded status amounts recognized in the Company s consolidated balance sheets additional year end information and assumptions used in determining the benefit obligations and net periodic benefit cost
The Company has a 401 k plan in which an employee can participate after one month of employment Employees may elect to defer up to 100 of their annual earnings subject to Internal Revenue Code limits The Company makes a matching contribution on these deferrals up to 4 of the employee s annual earnings after one year of employment Participants vest in any matching contribution at a rate of 20 per year beginning after one year of employment In addition for calendar year 2024 and 2023 the Company contributed a discretionary profit sharing of 2 of gross wages deposited into the 401 k account of all eligible employees During fiscal years 2024 2023 and 2022 the Company contributed to the plan and recognized expenses of 915 000 676 000 and 445 000 respectively
The Company is from time to time involved in various lawsuits and legal proceedings that arise in the ordinary course of business At this time the Company is not aware of any pending or threatened litigation against it that it expects will have a material adverse effect on its business financial condition liquidity or operating results Legal claims are inherently uncertain however and it is possible that the Company s business financial condition liquidity and or operating results could be adversely affected in the future by legal proceedings
The Company was party to a lawsuit initiated on March 27 2018 against Southern California Edison in Superior Court of the State of California County of Los Angeles whereby the Company claimed unspecified damages attorneys fees and other costs as a result of the Thomas Fire in fiscal year 2018 On April 18 2023 the Company entered into a Confidential Settlement Agreement and Release the Settlement Agreement with Southern California Edison Company and Edison International to formally resolve any and all claims related to the fire Under the terms of the Settlement Agreement the Company was awarded a total settlement of 9 000 000 On May 19 2023 the Company received 6 109 000 net of legal and related costs of which 3 840 000 was recorded in agribusiness revenues and 2 269 000 was recorded in gain on legal settlement
Dividends The holders of shares of Series B Stock are entitled to receive cumulative cash dividends at an annual rate of 8 75 of par value Such dividends are payable quarterly on the first day of January April July and October in each year
Redemption The Company at the option of the Board of Directors may redeem the Series B Stock as a whole or in part at any time or from time to time on or after August 1 2017 and before July 31 2027 at a redemption price equal to the par value thereof plus accrued and unpaid dividends thereon to the date fixed for redemption Redemption by the Company of a portion of the Series B Stock totaling 14 790 shares is subject to certain conditions agreed upon between the Company and the holders of this portion of the Series B Stock
Conversion The holders of Series B Stock have the right at their option to convert such shares into shares of Common Stock of the Company at any time prior to redemption The conversion price is 8 00 per share of Common Stock Pursuant to the terms of the Certificate of Designation Preferences and Rights of the Series B Stock the conversion price shall be adjusted to reflect any dividends paid in Common Stock of the Company the subdivision of the Common Stock of the Company into a greater number of shares of Common Stock of the Company or upon the advice of legal counsel
Put The holders of Series B Stock may at any time after July 1 2017 and before June 30 2027 cause the Company to repurchase such shares at a repurchase price equal to the par value thereof plus accrued and unpaid dividends thereon to the date fixed for repurchase The put features of a portion of the Series B Stock totaling 14 790 shares are subject to certain conditions agreed upon between the Company and the holders of this portion of the Series B Stock
Because the Series B Stock may be redeemed by holders of the shares at their discretion beginning July 1 2017 the redemption is outside the control of the Company and accordingly the Series B Stock has been classified as temporary equity
During March and April of 2014 pursuant to a Series B 2 Stock Purchase Agreement dated March 21 2014 the Company issued an aggregate of 9 300 shares of Series B 2 4 voting preferred stock with a par value of 100 00 per share Series B 2 Preferred Stock to WPI ACP Holdings LLC WPI an entity affiliated with WAM for total proceeds of 9 300 000 The transactions were exempt from the registration requirements of the Securities Act of 1933 as amended The Series B 2 Preferred Stock has the following rights preferences privileges and restrictions
Conversion Each share of Series B 2 Preferred Stock is convertible into common stock at a conversion price equal to the greater of a the then market price of the Company s common stock based upon the closing price of the Company s common stock on The NASDAQ Stock Market LLC or on such other principal market on which the Company s common stock may be trading or b 15 00 per share of common stock Shares of Series B 2 Preferred Stock may be converted into common stock i at any time prior to the redemption thereof or ii in the event the Option Agreement as defined below is terminated without all of the shares of Series B 2 Preferred Stock having been redeemed within 30 calendar days following such termination
Dividends The holder of shares of the Series B 2 Preferred Stock is entitled to receive cumulative cash dividends at an annual rate of 4 of the liquidation value of 1 000 per share Such dividends are payable quarterly on the first day of January April July and October in each year
Liquidation Rights In the event of any voluntary or involuntary liquidation dissolution or winding up of the Company the holder of shares of the Series B 2 Preferred Stock is entitled to be paid out of the assets available for distribution before any payment is made to the holders of the Company s common stock or any other series or class of the Company s shares ranking junior to the Series B 2 Preferred Stock an amount equal to the liquidation value of 1 000 per share plus an amount equal to all accrued and unpaid dividends
Redemption The Company may redeem shares of Series B 2 Preferred Stock only i from WPI or its designee and ii upon and to the extent of an election to exercise the option pursuant to the Option Agreement described below at a redemption price equal to the liquidation value of 1 000 per share plus accrued and unpaid dividends
Because the Series B 2 Preferred Stock may be redeemed by WPI at its discretion with the exercise of the Option Agreement the redemption is outside the control of the Company and accordingly the Series B 2 Preferred Stock has been classified as temporary equity
In connection with the sale of the Series B 2 Preferred Stock Associated Citrus Packers Inc Associated and another affiliate of WAM WPI ACP entered into a series of agreements related to the future ownership and disposition of farmland with associated Colorado River water rights and other real estate that is held by Associated in Yuma Arizona The agreements allow the parties to explore strategies that will make the highest and best use of those assets including but not limited to the sale or lease of assets or the expansion of a fallowing and water savings program in which a portion of Associated s property is currently enrolled
The net proceeds of any monetization event would be shared equally by the parties The agreements entered into include a Water Development Agreement and an Option Agreement Pursuant to the Water Development Agreement Associated granted WPI ACP exclusive rights to develop water assets attributable to the real estate owned by Associated for the mutual benefit of Associated and WAM Pursuant to the Option Agreement Associated granted WPI ACP an option to purchase an undivided interest of up to one half of the real estate owned by Associated in Yuma County Arizona the Property and the water rights associated therewith until January 1 2026 The purchase price for the Property subject to the Option Agreement will be paid via the redemption by the Company of a proportionate percentage of the Series B 2 Preferred Stock Unless and until a definitive agreement or definitive agreements with respect to Associated s real estate and water rights is entered into that would cause the cessation of farming operations Associated expects to continue farming the Property and recognize all results of operations and retain all proceeds from such operations
The Company has a stock based compensation plan that allows for the grant of common stock of the Company to members of management key executives and non employee directors The fair value of such awards is based on the fair value of the Company s stock on the date of grant and all are classified as equity awards In fiscal year 2022 the 2010 Stock Plan terminated and was replaced by the 2022 Stock Plan the Stock Plan and together with the 2010 Stock Plan the Stock Plans with 500 000 initial authorized shares In fiscal year 2024 an additional 1 000 000 shares were authorized The Stock Plan had 944 544 remaining shares available to be issued as of October 31 2024
Certain restricted stock grants are made to management under the Stock Plans Performance Awards Historically the Company granted awards to management each December based on the achievement of certain annual financial performance and other criteria achieved during the previous fiscal year These grants were based on a percentage of the employee s base salary divided by the stock price on the grant date once the performance criteria were met and generally vested over a two year period as service is provided During December 2023 36 127 shares of stock with a per share price of 19 57 were granted to management for fiscal year 2023 performance resulting in total compensation expense of approximately 707 000 with 293 000 recognized in fiscal year 2023 and the balance recognized over the next two years as the shares vest
During April 2024 4 330 shares of stock with a weighted average per share price of 19 49 were granted to management and vested upon issuance The related compensation expense of 84 000 was recognized upon vesting During May 2024 35 779 shares of stock with a per share price of 20 07 were granted to management The related compensation expense of approximately 718 000 will be recognized over three years as the shares vest
In May 2024 the Company entered into Performance Share Based Agreements with members of management whereby the employees may be granted up to a maximum of 71 558 shares of common stock in the future based on the achievement of certain long term performance goals over a three year period The Company recorded 306 000 of stock compensation expense based on the awards probable of vesting during fiscal year 2024
Certain restricted stock grants are made to key executives under the Stock Plans Executive Awards These grants generally vest over a three year period as service is provided During November 2023 the Company granted 53 078 shares of common stock with a per share price of 14 13 to key executives The related compensation expense of approximately 750 000 will be recognized equally over the next three years as the shares vest
In fiscal year 2022 the Company entered into Retention Bonus Agreements with key executives collectively the Retention Bonus Agreements whereby the executives are eligible to receive cash and restricted stock grants During December 2023 the Company granted 12 709 shares of common stock with a per share price of 19 57 to key executives related to the Retention Bonus Agreements The related compensation expense of approximately 249 000 had 115 000 recognized for fiscal year 2023 and the balance recognized over the next year as the shares vest During June 2024 the Company granted 40 926 shares of stock with a per share price of 20 36 The related compensation expense of approximately 833 000 will be recognized over one year as the shares vest
In November 2023 the Company entered into Performance Share Based Award Agreements with key executives whereby the executives may be granted up to a maximum of 106 157 shares of common stock in the future based on the achievement of certain long term performance goals over a three year period The Company recorded 454 000 of stock compensation expense based on the awards probable of vesting during fiscal year 2024
The Company issues shares of restricted common stock to non employee directors under the Stock Plan on an annual basis that generally vest after a one year period Director Awards During January 2024 609 shares of stock were granted as Director Awards with a per share price of 20 37 During March 2024 an additional 26 478 shares of stock were granted as Director Awards with a per share price of 19 26
The Company recognized 4 116 000 3 841 000 and 2 732 000 of stock based compensation for fiscal years 2024 2023 and 2022 respectively of which the majority of the expense has been included in selling general and administrative expenses for all years presented Forfeitures are accounted for in the period that the forfeiture occurs The income tax benefit recognized in the income statement for stock based compensation arrangements was 1 451 000 1 075 000 and 604 000 for fiscal years 2024 2023 and 2022 respectively The total fair value of shares vested was 3 976 000 1 323 000 and 1 856 000 for fiscal years 2024 2023 and 2022 respectively The Company has unrecognized stock based compensation expense of 1 700 000 as of October 31 2024 which is expected to be recognized over the next one to two years as the shares vest All unvested shares are expected to vest
During fiscal years 2024 2023 and 2022 members of management exchanged 117 897 39 472 and 105 316 shares of common stock with fair values of 2 312 000 567 000 and 1 530 000 respectively at the dates of the exchanges for the payment of payroll taxes associated with the vesting of shares under the Company s stock based compensation programs
On December 17 2024 the Company declared a cash dividend of 0 075 per common share payable on January 15 2025 in the aggregate amount of 1 357 000 to common stockholders of record as of December 30 2024
The Company operates in four reportable operating segments fresh lemons lemon packing avocados and other agribusiness The reportable operating segments of the Company are strategic business units with different products and services distribution processes and customer bases The fresh lemons segment includes sales farming and harvest costs and third party grower and supplier costs relative to fresh lemons The lemon packing segment includes packing revenues and lemon packing costs The lemon packing segment revenues include intersegment revenues between fresh lemons and lemon packing The intersegment revenues are included gross in the segment note and a separate line item is shown as an elimination The avocados segment includes sales farming and harvest costs The other agribusiness segment primarily includes sales farm management farming and harvest costs brokered fruit costs of oranges and specialty citrus other crops fallowing revenue shipping revenue and shipping costs During fiscal year 2024 the Company changed its reporting of other revenue and other costs and includes these items in the other agribusiness segment instead of the fresh lemons segment Prior years information has been restated to conform to the current year s presentation
The Company does not separately allocate depreciation and amortization to its fresh lemons lemon packing avocados and other agribusiness segments No asset information is provided for reportable operating segments as these specified amounts are not included in the measure of segment profit or loss reviewed by the Company s chief operating decision maker The Company measures operating performance including revenues and operating income of its operating segments and allocates resources based on its evaluation The Company does not allocate selling general and administrative expense impairment of intangible asset gain or loss on disposal of assets gain on legal settlement total other income expense and income taxes or specifically identify them to its operating segments The lemon packing segment earns packing revenue for packing lemons grown on its orchards and lemons procured from third party growers Intersegment revenues represent packing revenues related to lemons grown on the Company s orchards
The Company evaluated events subsequent to October 31 2024 through the date of this filing to assess the need for potential recognition or disclosure in this Annual Report Based upon this evaluation except as described in the notes to consolidated financial statements it was determined that no other subsequent events occurred that require recognition or disclosure in the consolidated financial statements
As of October 31 2024 we carried out an evaluation under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined in Rule 13a 15 e promulgated under the Exchange Act Based upon that evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report
Management of Limoneira Company the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in the Exchange Act Rule 13a 15 f Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The Company s management including the principal executive officer and principal financial officer conducted an evaluation of the effectiveness of Limoneira Company s internal control over financial reporting based on the framework in
issued by the Committee of Sponsoring Organizations of the Treadway Commission Based on this evaluation management concluded that internal control over financial reporting was effective as of October 31 2024 Deloitte Touche LLP an independent registered public accounting firm audited the effectiveness of the Company s internal control over financial reporting and issued a report on internal control over financial reporting which is included herein
issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO In our opinion the Company maintained in all material respects effective internal control over financial reporting as of October 31 2024 based on criteria established in
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated financial statements as of and for the year ended October 31 2024 of the Company and our report dated December 23 2024 expressed an unqualified opinion on those financial statements based on our audit and the report of the other auditors
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
There have been no significant changes in our internal control over financial reporting during the quarter ended October 31 2024 or to our knowledge in other factors that have materially affected or are reasonably likely to materially affect our internal control over financial reporting
Control systems no matter how well conceived and operated are designed to provide a reasonable but not an absolute level of assurance that the objectives of the control system are met Further the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs Because of the inherent limitations in all control systems no evaluation of controls can provide absolute assurance that all control issues and instances of fraud if any within the Company have been detected Because of the inherent limitations in a cost effective control system misstatements due to error or fraud may occur and not be detected
Certain information required by Part III is omitted from this Annual Report because we will file a definitive Proxy Statement for the Annual Meeting of Stockholders pursuant to Regulation 14A of the Exchange Act the Proxy Statement not later than 120 days after the end of the fiscal year covered by this Annual Report and the applicable information included in the Proxy Statement is incorporated herein by reference
Per Item 15 c registrants shall file as financial statement schedules to this Form 10 K the financial statements required by Regulation S X 17 CFR 210 which are excluded from the annual report to stockholders by Rule 14a 3 b including 1 separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons 2 separate financial statements of affiliates whose securities are pledged as collateral and 3 schedules
Certificate of Merger of Limoneira Company and The Samuel Edwards Associates into Limoneira Company dated October 31 1990 Incorporated by reference to exhibit 3 2 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Certificate of Merger of McKevett Corporation into Limoneira Company dated December 31 1994 Incorporated by reference to exhibit 3 3 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Agreement of Merger Between Ronald Michaelis Ranches Inc and Limoneira Company dated June 24 1997 Incorporated by reference to exhibit 3 6 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Restated Certificate of Incorporation of Limoneira Company dated July 5 1990 Incorporated by reference to exhibit 3 1 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Certificate of Amendment of Certificate of Incorporation of Limoneira Company dated April 22 2003 Incorporated by reference to exhibit 3 7 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Certificate of Amendment of Certificate of Incorporation of Limoneira Company dated March 24 2010 Incorporated by reference to exhibit 3 9 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Certificate of Amendment of Certificate of Incorporation of Limoneira Company dated March 29 2017 Incorporated by reference to exhibit 3 1 to the Company s Current Report on Form 8 K filed March 31 2017 File No 001 34755
Certificate of Amendment of Certificate of Incorporation of Limoneira Company dated March 26 2024 Incorporated by reference to exhibit 3 1 to the Company s Current Report on Form 8 K filed March 28 2024 File No 001 34755
Certificate of Designation Preferences and Rights of Series A Junior Participating Preferred Stock 01 Par Value of Limoneira Company dated November 21 2006 Incorporated by reference to exhibit 3 8 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Certificate of Designation Preferences and Rights of 8 75 Voting Preferred Stock 100 00 Par Value Series B of Limoneira Company dated May 21 1997 Incorporated by reference to exhibit 3 4 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Amended Certificate of Designation Preferences and Rights of 8 75 Voting Preferred Stock 100 00 Par Value Series B of Limoneira Company dated May 21 1997 Incorporated by reference to exhibit 3 5 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Certificate of Designation Preferences and Rights of 4 Voting Preferred Stock 100 00 Par Value Series B 2 of Limoneira Company dated March 20 2014 Incorporated by reference to exhibit 3 1 to the Company s Current Report on Form 8 K filed March 24 2014 File No 001 34755
Real Estate Advisory Management Consultant Agreement dated April 1 2004 by and between Limoneira Company and Parkstone Companies Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K filed August 25 2010 File No 001 34755
Amendment No 1 to Real Estate Advisory Management Consultant Agreement dated August 24 2010 by and between Limoneira Company and Parkstone Companies Incorporated by reference to exhibit 10 2 of the Company s Current Report on Form 8 K filed August 25 2010 File No 001 34755
Lease Agreement dated February 15 2005 between Limoneira Company and Calavo Growers Inc Incorporated by reference to exhibit 10 6 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Judgment dated March 7 1996 United Water Conservation Dist v City of San Buenaventura et al Case No 115611 Superior Court of the State of California Ventura County Incorporated by reference to exhibit 10 24 to the Company s Registration Statement on Form 10 and amendments thereto declared effective April 13 2010 File No 000 53885
Series B 2 Preferred Stock Purchase Agreement dated March 21 2014 by and between Limoneira Company and WPI ACP Holdings LLC Incorporated by reference to exhibit 10 1 to the Current Report on Form 8 K filed March 24 2014 File No 001 34755
Contribution Agreement dated September 4 2015 by and among Limoneira Company and Lewis Santa Paula Member LLC Incorporated by reference to exhibit 10 1 to the Company s Current Report on Form 8 K filed September 10 2015 File No 001 34755
First Amended and Restated Limited Liability Company Agreement of Limoneira Lewis Community Builders LLC dated November 10 2015 by and among Limoneira EA1 Land LLC and Lewis Santa Paula Member LLC Incorporated by reference to exhibit 10 1 to the Company s Current Report on Form 8 K filed November 16 2015 File No 001 34755
Retained Property Development Agreement dated November 10 2015 by and among Limoneira Company and Limoneira Lewis Community Builders LLC Incorporated by reference to exhibit 10 3 to the Company s Current Report on Form 8 K filed November 16 2015 File No 001 34755
Master Loan Agreement dated June 1 2021 between Limoneira Company and Farm Credit West PCA Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K filed June 17 2021 File No 001 34755
Promissory Note and Revolving Credit Facility Supplement to Master Loan Agreement dated June 1 2021 between Limoneira Company and Farm Credit West PCA Incorporated by reference to exhibit 10 2 of the Company s Current Report on Form 8 K filed June 17 2021 File No 001 34755
Promissory Note and Non Revolving Credit Facility Supplement to Master Loan Agreement dated June 1 2021 between Limoneira Company and Farm Credit West PCA Incorporated by reference to exhibit 10 3 of the Company s Current Report on Form 8 K filed June 17 2021 File No 001 34755
Agreement to Convert to Fixed Interest Rate dated June 8 2021 between Limoneira Company and Farm Credit West PCA Incorporated by reference to exhibit 10 4 of the Company s Current Report on Form 8 K filed June 17 2021 File No 001 34755
Limoneira Company 2022 Omnibus Incentive Plan as approved by the Stockholders on March 22 2022 Incorporated by reference to exhibit 10 2 of the Company s Current Report on Form 8 K filed August 1 2022 File No 001 34755
Amendment to Limoneira Company 2022 Omnibus Incentive Plan dated March 26 2024 Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K filed March 28 2024 File No 001 34755
Form of Time Based Restricted Share Award Agreement for Non Employee Directors Pursuant to the Limoneira Company 2022 Omnibus Incentive Plan Incorporated by reference to exhibit 10 3 of the Company s Current Report on Form 8 K filed August 1 2022 File No 001 34755
Form of Performance Based Restricted Share Award Agreement Pursuant to the Limoneira Company 2022 Omnibus Incentive Plan Incorporated by reference to exhibit 10 4 of the Company s Current Report on Form 8 K filed August 1 2022 File No 001 34755
Form of Time Based Restricted Share Award Agreement for Employees Pursuant to the Limoneira Company 2022 Omnibus Incentive Plan Incorporated by reference to exhibit 10 5 of the Company s Current Report on Form 8 K filed August 1 2022 File No 001 34755
Purchase and Sale Agreement dated as of September 7 2022 by and between Limoneira Company and Limoneira Lewis Community Builders LLC Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K filed September 8 2022 File No 001 34755
Retention Bonus Agreement dated October 26 2022 between Limoneira Company and Harold Edwards Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K filed October 27 2022 File No 001 34755
Retention Bonus Agreement dated October 26 2022 between Limoneira Company and Mark Palamountain Incorporated by reference to exhibit 10 2 of the Company s Current Report on Form 8 K filed October 27 2022 File No 001 34755
First Amendment to the First Amended and Restated Limited Liability Company Agreement of Limoneira Lewis Community Builders LLC dated October 25 2022 Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K A filed October 31 2022 File No 001 34755
Limited Liability Company Agreement of LLCB II LLC dated October 25 2022 Incorporated by reference to exhibit 10 2 of the Company s Current Report on Form 8 K filed on October 26 2022 File No 001 34755
Closing Agreement dated October 25 2022 between the Company Limoneira Lewis Community Builders LLC and Limoneira Lewis Community Builders II LLC Incorporated by reference to exhibit 10 4 of the Company s Current Report on Form 8 K A filed on October 31 2022 File No 001 34755
Farm Management Agreement dated January 31 2023 by and between Capital Agricultural Property Services Inc by and between Capital Agricultural Services Inc and Limoneira Company Incorporated by reference to exhibit 10 6 of the Company s Quarterly Report on Form 10 Q filed March 9 2023 File No 001 34755
Grower Packing Marketing Agreement dated as of January 31 2023 by and between Limoneira Company and PAI Centurion Citrus LLC Incorporated by reference to exhibit 10 7 of the Company s Quarterly Report on Form 10 Q filed March 9 2023 File No 001 34755
Transaction Bonus Agreement dated August 22 2024 between Harold Edwards and Limoneira Company Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K filed August 23 2024 File No 001 34755
Transaction Bonus Agreement dated August 22 2024 between Mark Palamountain and Limoneira Company Incorporated by reference to exhibit 10 2 of the Company s Current Report on Form 8 K filed August 23 2024 File No 001 34755
Cooperation Agreement by and between Limoneira Company and Peter J Nolan dated December 15 2023 Incorporated by reference to exhibit 10 1 of the Company s Current Report on Form 8 K filed December 18 2023 File No 001 34755
Filed or furnished herewith In accordance with Item 601 b 32 ii of Regulation S K and SEC Release Nos 33 8238 and 34 47986 Final Rule Management s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports the certifications furnished in Exhibits 32 1 and 32 2 hereto are deemed to accompany this Annual Report on Form 10 K and will not be deemed filed for purposes of Section 18 of the Exchange Act Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 as amended the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on December 23 2024
Pursuant to the requirements of the Securities Exchange Act of 1934 as amended this report has been signed below on December 23 2024 by the following persons on behalf of the registrant and in the capacities indicated

Company Name	Limoneira CO Vist SEC web-site
Category	AGRICULTURE PRODUCTION - CROPS
Trading Symbol	LMNR