Q4 2019 Earnings Call
Good day, and what can still be able to fourth quarter 2019 earnings call. Today's conference is being recorded.
It sounds like to turn the conference over to Mr., John Doe device Young. Please go ahead Sir.
Great. Thank you good afternoon, everyone and thank you for joining us for Luminaires fourth quarter fiscal year 20, Nike Inc. conference call.
Well multiyear Harold Edwards, President and Chief Executive Officer at Markel, Nelson Chief Financial Officer.
Hi, everyone should have access to the fourth quarter fiscal year 2019 earnings release, which went out to date approximately four PM eastern time.
Not at a chance to get a release, it's available on the Investor Relations portion of the company's website at Lehman airline dotcom.
This call is being webcast, a replay will be available luminaires website as well.
Before we begin we'd like to remind everyone to prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions such statements involve a number of known and unknown risks and uncertainties many of which are outside the company's control could cause future results performance or achievements to differ significantly from the results performance work.
Lets expressed or implied by such forward looking statements important factors that could cause or contribute to such differences, including risks detailed in the company's 10-Q's engine case filed with the FCC those mentioned in the earnings release.
Kept as required by law, we undertake no obligation to update any forward looking for other statements herein, whether it's all the new information future events or otherwise.
Please note that during today's call will be discussing non-GAAP financial measures, including results of adjusted basis.
<unk> adjusted financial measures can facilitate a more complete analysis in greater understanding of Luminaires ongoing results of operations, particularly when comparing underlying results from period to period.
We provided as much detail as possible any items that are discussed on adjusted basis also within the company's earnings release in today's prepared remarks. We include adjusted EBITDA, which the non-GAAP financial measure a reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measures is included in the company's 10-K and press release, which has been.
Posted to the web site.
And with that because it's my pleasure to turn the call over the Companys, President and CEO Mr. Harold Edwards, Thanks, John and good afternoon, everyone.
On today's call I'll provide a brief overview of our operation results in fiscal 2019, and an update on our progress across all of our business areas as we enter fiscal year 2020.
I will then review the financial results in more detail and I will finish with our reiterated outlook for fiscal year 2020.
After that we will open up the call and take your questions.
We achieved record revenue in fiscal 2019, however, uncontrollable weather events affected lemon and orange pricing and fresh utilization throughout the year and dramatically reduced our ocado crop for fiscal year 2019.
Our London volume was very strong in fiscal year 2019, as we grew a record treat crop.
Unfortunately, due to lower fresh utilization rate for part of the here and lower pricing due to sizing of fruit our record volumes did not translate into our expected bottom line profits.
It is important to point out that the weather events that affected the overall lemon and orange industry throughout the year offset the fact that we increased our market share.
Also the overall lemon industry continues to expand globally, and we fully expect that to that to continue for many years to comp.
As we enter fiscal year 2020 pricing per carton has improved and our fresh utilization rates have now increase back to a range of 70% to 75% from below 50% in the third quarter last year.
We experienced strong wins during the first quarter on a ranches in southern California, and this could affect the grade of a portion of our lemons, which could negatively impact the overall rate of lemons. We harvest later this year, even with this effect. We believe we will see prices increase over last year.
I'm pleased that with the temporary challenges we faced in fiscal year 2019, we still we're able to generate positive adjusted EBITDA close a strategic acquisition and are very well positioned to continue our market share growth and returned to strong adjusted EBITDA results in fiscal year 2020.
I'll now shift to discussing our business segments, starting with a four view of our agribusiness.
Over the past few years, we have made important investments that habits position for long term growth and improved efficiencies, we've expanded our customer base to over 250 customers, including leading restaurants and grocery store chains, we've been able to achieve this expansion by leveraging our domestic and international marketing and sales channels.
Focusing more on trade marketing and consumer facing strategies and utilizing our increased packing capacity.
In addition, we've significantly reduced seasonality for our customers by sourcing citrus from different global locations, giving US 365 days, a fresh lemons supply.
A great example of this global expansion is the joint venture. We closed this year in May of 2019, we acquired a 51% interest in a joint venture Trapani fresh for with FGF Trapani, a multi generational family owned citrus operation in Argentina.
Also in fiscal year 2019, we surpassed our new carton goal by securing over 700000 cartons with another 500000 fresh cartons expected by the end of 2020, we now have over 9700 planted agricultural acres of which approximately 1200 acres.
We are currently nonbearing lines, the estimated to become full bearing over the next four years in 2020, we expect 300 acres of these acres to be full bearing with an additional 300 acres to be full bearing by 2021 and the remaining 600 to become full varying by 2023.
These 1200 acres, we have plans to Platte, an additional 250 acres of lemons through the next two years and believe this additional acreage will increase our domestic supply of leaving their own Clemens by approximately 50% from our current level of 900000 cartons to 1.3 million additional fresh.
Cartons as the nonbearing and planned acreage become productive.
Addition, we expect to have a steady increase in third party grower fruit.
Turning to because in fiscal year 2019, our production was down due to the previously announced extreme heat that affected production as expected we recognize minimal avocado revenue in 2019, but we will be back to normal production in fiscal year 2020.
Turning out to our real estate development segment.
Happy to report that the partnership between Luminaire and the Lewis group of companies for the development of harvest at Limoneira is on track.
Phase one site improvements have been substantially completed and the joint ventures received locked deposits from Lenore and Kb homes in fiscal year 2018.
Initial lot sales, representing 210 residential units close in fiscal 2019, and we recently closed an additional 33 in the first quarter fiscal year 2020 longer term, we are projecting approximately $100 million in cash flow from harvest at Limoneira project over the next six.
To nine years, which is expected to include 1500 homes.
In addition, during the fourth quarter, we announced the sale of a multi use facility consisting of a retail convenient store gas station Carwash and quick serve restaurant located in Santa Paula, California. The transaction closed on August Thirtyth 2019, and we received approximately $4 million net proceeds and recorded a gain of approximately.
$600000 in the fourth quarter.
Lastly in October of 2019, we sold the terraces at Pacific Crest for approximately $3 million received net proceeds of $2.9 million and recognize the gain of approximately 400000.
Dollars during the fourth quarter.
In summary, while our from full year fiscal 2019 results were affected by unforeseen weather conditions. It is a temporary hurdle and does not diminish the inroads we have made to position us for solid growth and improved profitability in the coming years and with that I'll now turn the call over to Mark.
Thank you Harold and good afternoon, everyone I will discuss some of the details of our financial results for the fourth quarter and full year ended October 31, 2019, I'd like to reiterate to everyone that due to the seasonal nature of our business revenue was driven by varying harvest periods from year to year and therefore, we believe it it's prudent to view our.
And that's on an annual basis, not a quarterly basis historically, our first and fourth quarters are the seasonally softer quarters, while our second and third quarters are stronger.
For the fourth quarter of fiscal year 2019, total net revenue was $36.5 million compared to total net revenue of $14.7 billion in the fourth quarter of the previous fiscal year.
Agribusiness revenue was $35.3 million compared to $13.5 million in the fourth quarter last year. The increase was primarily due to higher level volume offset by lower fresh lemon prices and lower fresh utilization.
Rental operations revenue was $1.2 million in fiscal year 2019.
Similar to the fourth quarter of last year.
Agribusiness revenue for the fourth quarter of fiscal year 2019 includes $17 million have a fresh lemon sales compared to $7.1 million a fresh lemon sales during the same period of fiscal year 2018, the increase resulted from higher lemon volume offset by lower fresh lemon prices and lower.
Fresh utilization.
Approximately 793000 cartons of fresh lemons were sold during the fourth quarter of fiscal year 2019 at a 21 dollar and 46 cents average price per carton compared to approximately 239000 cartons sold at a 29 dollar and 71 cents average price per carton during the fourth.
Third quarter fiscal year 2018. Additionally, brokered another lemon sales increased approximately $7 million in the fourth quarter of fiscal year 2019, primarily as a result of adopting new revenue recognition standards.
As anticipated the company recognize $2.3 million of revenue from an avocado insurance payment related to the excessive heat in the summer of 2018 that dramatically affected avocado production in fiscal 2019 compared to minimal revenue in the fourth quarter of last fiscal year.
The company recognize $2.1 billion of Orange revenue in the fourth quarter of fiscal year 2019, compared to $300000 in the same period of fiscal year 2018, primarily attributable to a $1.4 million increase in brokered Orange is sold under the new revenue recognition standards.
Specialty citrus and other drop revenues were $2.1 million in the fourth quarter fiscal year 2019, compared to $1.4 million in the fourth quarter of fiscal year 2018. The increase was primarily due to increased wine grape infrastructure revenues.
Total cost and expenses for the fourth quarter fiscal year, 2019 increased to $40.1 million compared to $24.3 million in the fourth quarter of last fiscal year.
Fourth quarter of fiscal year 2019 increase in operating expenses was primarily attributable to increases in agribusiness costs and expenses due to increased volume of third party grower Levin's packs and sold and increased selling general and administrative costs due to the acquisition of Trapani Frac.
Cost associated with the company's agribusiness include packing cost harvest cost growing cost costs related to the fruit procured and sold for third party growers and depreciation expense.
Operating loss for the fourth quarter fiscal year, 2018 was $3.6 million compared to a loss of $9.6 million in the fourth quarter of the previous fiscal year net loss applicable to common stock after preferred dividends for the fourth quarter of fiscal year 2019 was 3.2.
Million dollars and compares to a net loss of $3.4 million in the fourth quarter fiscal year 2018.
Net loss per diluted share for the fourth quarter fiscal 2019 was 18 cents and 19 cents for fiscal year 2018.
Excluding the noncash unrealized gain on stock and Calavo growers equity in earnings of Luminaire, Louis committed to builders and a gain on sale of property assets for the fourth quarter fiscal year 2019, adjusted net loss applicable to common stock was $4.2 million or 24 cents.
Good share compared to fourth quarter of fiscal year, 2018, net loss of $5.3 million or 30 cents per diluted share, which excludes the $4.2 million realized gain on stocking calavo and $1.6 million noncash impairment of Santa Maria real estate assets.
Adjusted EBITDA was a loss of $2.1 million in the fourth quarter fiscal year 2018, compared to a loss of $1.2 million in the same period of fiscal year 2018.
A reconciliation of adjusted EBITDA to net income has provided at the end of this release.
For the fiscal year ended October 31 in 2019 revenue increased to $171.4 million compared to $129.4 million for the fiscal year ended October 31 in 2018.
Operating loss for the fiscal year, 2019 was $5.5 million compared to an operating income of $9.5 million for the fiscal year 2018.
Net loss applicable to common stock after preferred dividends was $6.4 million for the fiscal year 2018, compared to a net income of $19.7 million for the fiscal year 2018.
Net loss per diluted share for the fiscal year 2019 was 37 cents compared to a net income per diluted share of a dollar and 25 cents for the fiscal year 2018.
Excluding the gain on asset sales of $1.1 million $2.1 million noncash unrealized loss on stock in Colorado and $2.9 million, an equity earnings of Luminaire. Louis community builders for the fiscal year 2019, adjusted net loss applicable to common stock was 7.8 million.
In dollars or 45 cents per share. This compares to adjusted net income of $7.9 million or 50 cents per diluted share for the same period in fiscal year, 2018, which excludes a 10.3 million dollar or 63 cents per diluted share noncash onetime tax benefit.
Associated with the decrease in its deferred tax liability during the first quarter of fiscal year 2018, a $4.2 million gain from the sale of Calavo growers stock and a $1.6 million or seven cents per diluted share noncash impairment of Santa Maria real estate asset.
During the fourth quarter of fiscal year 2018.
Per share data as based on approximately 17.6 million and 16.2 million shares respectively weighted average diluted common shares outstanding.
Adjusted EBITDA for the fiscal year, 2019 was $1.9 million compared to $23.4 million in the same period last year.
A reconciliation of adjusted EBITDA and net income is provided at the end of this release.
Before I hand, the call back over to Herald, a few comments on our balance sheet long term debt as of October 31, 2019 was $105.9 million compared to $77 million at the end of fiscal year 2018, we expect to be free cash flow breakeven and 2020 now I would like to.
During the call back the Harold to discuss our fiscal year 2000.
20 outlook.
Thank you Mark we achieved a number of goals this year, but the weather had an adverse effect on our bottom line in our three main crops of lemons, and avocados, and oranges, which hasn't happened to our company in over 30 years.
Full year fiscal year 2019, we grew a record treat crop of elevens based on the organic Lemon Grove, we are projecting for fiscal year 2020, as well as the expected rebound and how to kind of revenue and the fact that all of our recent acquisitions will have been online for a full year. We remain excited about the launch.
Term growth of our company.
Turning to our fiscal year 2020 guidance.
Order to simplify our guidance and use metrics that we believe will help you better understand how the operational assets of our company are performing we're providing adjusted EBITDA guidance and London volume guidance by cartons and will not be providing earnings per share guidance going forward. We believe adjusted EBITDA can facilitate a more.
Fleet analysis, and greater transparency into our ongoing results of operations and remove certain non cash items that could that can create fluctuations in its earnings per share.
Excluding the noncash mark to market on stock in Calavo and equity in earnings from harvest at Limoneira adjusted EBITDA for fiscal year 2020 is expected to be in the range of $22 million to $26 million for fiscal year 2020, we believe our domestic and international affiliate.
We are expecting to sell 7.5 to 9.5 million cartons of fresh lemons globally included in the global Cartons estimates are five to 6 million cartons the company expects to sell domestically.
Let me on 2020, we expect approximately $100 million in cash flow from harvest at Limoneira over the six to nine year life about project. The company expects full year benefit from the Argentina joint venture formed with FGF Trapani and land acquisition in fiscal year 2020.
And with that I'd like to open the call up to your questions operator.
Thank you if you'd like to ask a question. Please take a pressing star going any telephone keypad, if you're using a speaker phone, because michigan, which is to adopt pillay signal to reshape equipment.
But to give it a star one if you'd like to ask a question.
We'll take our first question from Dana beginning with Stephens Inc. Please go ahead.
Hey, good afternoon.
I've been that I wanted to start and ask.
About a carton guidance the global guidance I don't happen on a million in the domestic guidance of five to 6 million.
Wider range than we've seen historically I'm just curious.
Elements.
Within that guidance, but drive variability from one end together and then Harold you mentioned comments I think briefly on wind in the first quarter first quarter.
Any comments you could make a that would help fill in and provide color on that would be helpful. As it relates to the full year and things that you have visibility at this point.
No I'd be happy to ban so the the treat crops across each of the districts domestically. So de three in the in the desert de one up in the San Joaquin Valley and de too on the California Coast are essentially the same as as the prior year.
Not significantly more for last year as we make comments too was a record treat crop year. This year seems to be a similar year at this point with we've returned back to a normal distribution of size and grades, which bodes very well for our ability to.
Market itself.
Hi levels of fresh utilization, which was our primary challenge last year.
With that said, we believe though that as we've engaged in more food service contract sales will see the.
Crops from.
District, one and district, too, which is the basically the spring and summer crops begin to move forward, which may have an impact of selling smaller greener fruit, which is great from a fresh sales perspective, but could influence.
The volume that we sell and and meaning meaning that we would sell fewer fresh cartons, but typically that's associated with higher pricing opportunities for us. So thats. The reason we stretched out the range just because we think the tree profits. There we feel very confident that we'll have a at or normal fresh.
Utilization rates, but if our harvest strategy brings more fruit off earlier, we could see fewer cartons going out at that at this point higher pricing than we than we initial thoughts. So it's that volume price relationship that we play with every day as we sort of view of mother Nature's, giving.
Yes on our trees.
Okay. That's great and then maybe just following on there you mentioned hi wins in the quarter to date period.
What visibility do you have at this point and just any elaboration. If you can on that if not having to wait till next quarter to get a union.
We won't know for sure until we get to the next quarter, but.
Every year in the early fall season into the early winter season, we experience, we can't experienced strong Santa Ana wins in this year was no exception, we had a number of high wind events and and typically what that does that is that will often challenge the quality.
Of the fruit and what might normally be sold as a as a number one grade fancy grade at a high price now made because it has scarring the fruit maybe scarred it may be downgraded to a up to a choice grade ore in the most extreme cases, a standard grade and the reason we mentioned news because.
Typically that'll manifest itself in pricing due to unfavorable product mix is because we'll have more choice fruit than fancy fruit. So we mentioned the wind events, just as a sort of.
Caution to potential pricing at this point, we don't have enough visibility to say, one way or the other than our pricing will be challenged because of that quality, but but because the when we've had significant wind events. We wanted to get it out there so that any of that if we saw a higher percentage of choice or standard.
Fruit sales, which brought our overall pricing down we'll be able to point to that.
Okay great.
Mark you made some comments about the balance sheet.
In the prepared remarks, I'm curious can you help us think about how you think about the balance sheet today and weather.
You think it gives us flexibility to continue to be acquisitive, you guys have been opportunistic historically on M&A and advanced great deals. So just curious to get a sense of.
How calibrated you are this year for pursuing continued operative opportunistic M&A versus deleveraging the balance sheet.
Yeah sure that's great question, but I think typically we like to look at out an EBITDA perspective sort of three to five four times, we're comfortable with obviously right now on the higher end of that you know right out in front of US we do see cash flows from harvest coming you know which will be at the end of.
21, and 22, so kind of not there yet I think from an acquisition perspective or or Capex.
As well they were going to.
Be on hold for the moment.
We've made a few acquisitions, obviously in the last few years with where digesting well I think the South America stuff will be.
Sort of the next focus of the legs for Capex.
Specifically into Chile, we've started on plans of I'm looking at building, a basically replicating what we didn't Santa Paula and the packing house.
And that putting more money down there and doubling the production over the next five to seven years, so that probably won't take place until.
Later this year the beginning of next year as my take just we want to get this year out I'm in front of US you know we would obviously had a year we had last year and so you know building up the copper is I think is a good idea for us and you know any opportunistic sale, we have of real estate assets that are around we.
Our continuing to look at so we definitely are very balance sheet focused and it will be a priority this year to manage that.
Great. Thanks, and good luck with this year, thanks for taking my questions.
Thank you Ben.
Thank you know tick on next question from Vincent Anderson with Stifel. Please go ahead.
Yes. Thanks.
Yes.
Okay excellent on.
Give off a little bit more detail on what your assumptions for mom wants a woman sales. This year I mean, it looks like you have.
Looking opportunities with long expected to be.
We continue to put option.
Update on Asian customer portfolio going just trying to quality in that guidance, how much could just be.
No upside.
Yeah, Great question Vince so.
This year, we're very optimistic from a customer perspective on being able to move up a very high percentage of the of the crop up from around the world you into the southeast Asian markets.
With that said, though those markets are heavily driven by quality and so if we're able to harvest a higher percentage of fancy fruit that fruit typically command premium pricing in the Japanese Korean.
And other southeast Asian tire countries, but.
If we're not able to come up with high high percentage of fancy fruit that typically the choice grades will stay closer to home domestically.
If we are able to achieve what we think directionally our estimates of.
Fancy grade production in a in district, one and district to for the remainder of the year than we should be about 30% of our total crop ex export it into the southeast Asian markets. If we don't get that quality that we would prefer to bring that down more to a 25% export opportunity right now.
We're seeing very strong export movement.
We're seeing a excellent quality coming from the field and sort of as anticipated.
Product mixes in grade mixes between fancy or scheduled choice and standard grades. So at least at this point, we seem to be on track with our plan and are on track to achieve the volume targets that we made as.
Baked into the guidance that we gave on an EBITDA perspective is a spin assumed lemon pricing $22.50 a card.
Great. Thank you.
So now that we're entering in the next few years, we'll see a pretty steady stream of new acres coming on can you just go back to remind us of one the timing difference between when you stop capitalizing the acreage expense and when the trees actually sold fresh fruit yields and then how that kind of shapes up from an operating leverage perspective.
To the two to three years of interest first coming online so to speak.
Sure absolutely so.
Typically takes up seven years for its free to what we'll call.
Full production.
Our financial perspective, we capitalize those.
We call full bearing in in the fifth year, so four years of capitalization.
<unk> expense and so you know over that period of time you know, it's it's once we get to that fifth year were call. It were about 65% to 70% of what we think full production is and then anywhere between the seventh intent here, we'll get to what we'll call a 100% and.
Thats different obviously in different regions in in the coast, it's different than in the desert, which is lower et cetera, and so from and looking at that from the 900000 to 1.2 million carton.
I'd like to think about our cost as approximately 16 to $17 per carton, depending on region and so we look at a price now at 20 to 50, you know we're looking at about a six.
To $7 profit a carton.
In the prior years, sometimes that gets as high as 12 14. It just depends on the pricing environment. So you you do that times a million cartons in your Thatcher additional operating income that you should expect to see from those acres.
Great. Thanks.
Just sneak in one more here market question I was hoping you could comment on the depressed fancy premiums at least we're observing and mainly the mid sized woman grades looks like there that you know really decade lows I'm not sure if that's Mexican fruit improvement in quality or are shifting mark.
President preference, but just just curious on your thoughts or whether it's sustainable stays low like that's how you optimize your marketing around those those kinds of conditions.
So the main thing that hit us last year and you'll remember this very well Vince was beginning right about now.
The Spanish crop was one of the half times normal crop and with the surplus production much of that fruit found its way into the east coast markets at very very low pricing and from a grade perspective. It was it was all choice. There were so there were some fancy, but it was mostly choice great fruit and that was really what.
Foot the beginning of the pricing pressure on the overall markets. This year the Spanish crop is down the Egyptian crop is down in the Turkish crop is down so theres going to be a little bit less export pressure or imported fruit pressure in the east coast markets now that's not to say there are other lemons coming from other places the end of those.
Markets, but it's not it's not as crowded this year as it was last year and so we believe that that'll give us a good opportunity to ship in it fairly decent pricing into those markets.
We as I've mentioned in earlier discussions, we've we've moved to higher percentages of contractual business with both our foodservice customers and our retail customers at good pricing levels and that's fantastic because it gives us a great steady idea of of fruit flow we can have.
I have if we're able to put the boxes up based on our our partnership with mother nature. So that we've got the table set to have a pretty good year from a utilization perspective, and we think that pricing assumption that we sort of put in there is achievable.
But we'll just have to continue to report on it as we go through the year based on our experience of what mother nature provides to us from a grade and size perspective, but also how the markets respond also to be the competitive pressure of imported fruits from other places.
Alright, thank you.
Makes sense.
They kill tenets star one if you'd like to ask a question, we'll hear from Carson with Buckingham Research group.
Hello, everyone I couldn't hear me.
You got your hair Eric.
Hey, guys.
So I.
I think just might come out in the 10-K, but what was your.
Average selling price for fresh lemons in 2019 Harold.
It was 20 $121 I think.
Yeah.
And that I I just wanted just confirming this I think you just said that that Directionally you think it could be as much as 20 to 50 per carton next year is that correct.
Yes, so the assumption we made.
Is that we gave sort of a midpoint of 20 to 50.
Okay.
Mark markets you add it was $21.46.
In 2019 was the average selling price per carton.
Okay. Okay.
And.
If you could just really quickly.
Give us a just a little kind of a checklist.
It would be the things that would that would move that price up what could potentially be the facts if it moves the price style.
Okay. So there is several dynamics to that and the answers are we could make something that is seemingly simple very complicated, but but included in this list of what can drive it up our.
Market opportunities, where demand exceeds supply, which typically gives us pricing opportunity. So that's that's the first thing right.
Well, it's just very heavily is if you're a percentage of higher grade fruit based on what the tree produces.
Is greater than your expectation and we'd be selling more fancy fruit, which typically commands a higher price than our choice grade fruit or standard grade fruit.
Conversely, what can drive the price down is when you have supply exceeds demand situations in markets and that typically.
Page pricing you know to its in essence is a commodity and the commodity impact is lower pricing in that event, but also a.
Consistent with that with the grade situation. If you had a lower percentage of fancy grade and a higher percentage of standard grade ore choice grid that from a product mix perspective of what we sell can can take its toll and have a pretty pretty significant impact on pricing.
Anecdotally, what I can tell you right now Eric is that the domestic market is experiencing a kind of steady flow of what we assumed was a utilization of fancy grade and choice grade.
Pricing is somewhere between 20 and $22, a carton domestically and the export markets are $24, a carton and.
And the impact of all of that is sort of keeping us pretty close to that 22 to $23. A carton range right now now as we look forward into the year that we'll continue to change. We believe that that gives us is going to give us an opportunity to see price increase opportunities, but we'll just have to report on it as we go.
Quarter to quarter based on the realities again of what what our trees actually give us versus what the market wants.
Yeah, No I was just try to last year was such an unusual year hours just trying to get.
I understand kind of supply demand side on each each end of the positive and negative side I was just trying to get a feel for exactly.
The things that may or may not repeat themselves next year that could give you know either some upside in the pricing or potential downside net pricing. So we can we can talk a little bit more about that offline, but the at the other the other question that I have it or you had you had.
50%, roughly 50% utilization I believe for the full year I know that was kind of a fourth quarter, if that does that provide assumption to make and.
Should we be thinking kind of the 70% to 80% utilization for next year as how we should look at it.
Yes, so I actually like what happened Eric last year was district, three which we started the year with in the desert at normal and actually excellent utilization rates. We came in at 70, 580% press utilization in the desert and then the crop shift up into the valley and up until two.
Two weeks until the end of the of the season, we were having normal utilization levels call. It 70% to 73% brush utilization and started to rate and then and then it started in the rain and as it has the reins impacted our ability to harvest in the valley and then also in the coast.
We were unable to get into harvest for eight weeks, so that by the time, we and everybody else in industry got into actually harvests, what actually came off the trees were were three sizes. Instead of seven sizes are eight sizes and it was all big fruit and 50% of that fruit, which was in storage.
Came on Sellable fresh and we were forced to send it to the juice plant. That's when the utilization dropped to 50% just during that time period for the full year fresh utilization for the full year of fresh utilization was 63% driven by that I did average up that the inputs that this coming year, we anticipate our mom.
Those are calling for a fresh utilization of 75% and at this time that's achievable.
Okay, Yeah that makes that makes sense I I just wasn't sure yeah that that's 63% was really the figure that I was was sort of looking for and then you know you've talked a lot but.
Thoughtful avocados Adam.
What that might be.
That'd be upside to that I mean, obviously.
What's very unusual bought last year as that you've got hit by all three of your major.
<unk> products, lemons, and avocados and oranges and.
And it seems like you should have.
Fairly.
Good runway.
Looking forward into this upcoming year debt that.
At least if some of us not all of that maybe two or three if not all three of those factors turn fear is that or is that a fair way to kind of characterize your 22 to 26 million dollar adjusted EBITDA.
<unk>.
Yes, Eric that's exactly exactly right, we've never seen all three of the crops fail at the same time and that's kind of what we experienced in 2019.
For directional guidance and avocados, we believe there is a four to 6 million pound crop hanging on the trees.
And.
The pricing it you follow the out of kind of stay so pricing is uncertain. So our models were built with a dollar a pound and and at this point markets are stronger than that but there's there's an awfully large crop as you know in Mexico and also in Peru that will find its way into these markets that my guess is we'll put downward pressure on the price.
So we'll just have to see.
We're off and running with Orange is right now and we're getting normal export movement, whereas last year, we got no export movement.
Pricing has been somewhat of a challenge, but we believe we're still on track to to hit our Orange numbers and then so far through this operating year you know through this limited amount of time, we're we're on track with utilization and and movement of our of our lemons as well. So we feel like we're off to a.
A good start, but we're going to work.
Cautiously optimistic as we as we go forward.
Okay, great. Thanks, I'll follow up if you back a little bit later.
Thanks, Eric.
Thank you will know tickets question from Ben Klieve with National Securities.
All right. Thanks for taking my question is just a couple of big picture ones for me here on first with regards to the weather you kind of alluded to this here I'll call it but on with regards to wane I'm wondering if you can kind of class supply.
Where the field stands today relative to where they were last year.
Winner out in California, but but.
It sounds like from your perspective, but different flat.
And that the while weather this years have gotten knocking and heavier your hard but at this point that you can tell.
Can you kind of update us on kind of how the weather has been thus far this year and compared to where you stand.
Last year.
Yes, definitely the rainfall last year, which came in at a pretty close to 30 inches in a normal year for us in Ventura County would be somewhere directionally around 17 inches. So almost two active and normal rainfall. It was a god send from a perspective of sort of putting in and to a seven year prolonged drought.
And that helped to replenish our aquifers. It was just a it was just a great thing all around except just the timing of the rain events kept us all in the industry from getting into harvest fruit for eight weeks. This year, we're off to a great start with rainfall as well.
I think we're somewhere around eight inches of rain something like that so so far the intervals between rain events and then dry periods have been just about perfect and ideal so far so absolutely no negative impact on harvest no negative impact.
On food quality, so far this year and as really setting itself up to be more of what we would consider a more of a normal situation in normal year now that said.
We really have to keep our eye on on weather events, all the way through the end of March and that would really be where the where the big impacts could continue to be so out but as we as we look forward with a limited amount of visibility we have today things are looking pretty good.
Okay perfect them here, it's always good when mother nature cooperate on.
One other question for you out the rest of the Harmfully Minera I understand that the kind of sizable cash flows aren't aren't necessarily expected the khan.
Turning 20 fiscal 2020, but I'm wondering if you can kind of provide us what kind of some milestones that are looking out that over the next 12 months on and you know it when do you think may have visibility of.
Really that that cash flow really being really being tangible that's something you think you're working on.
Can you hear more about over the next 12 months or is it getting to be potentially be beyond that.
Yes, so I think from the cash flow perspective, there harvest will have a better idea towards the end of this year 20, originally in our our models, which we started about three years ago. It before we started building was going to be in 21, but I think as sales are progressing through.
Taking a more conservative approach to that and we'll be in 22 will be that first lumpy cash flow opportunity you know to the tune of $20 million is roughly sort of how that looks over you know between now and then I think you know it's just we're just going to have to see how that the sales.
Going sales right now our we're doing anywhere between one to two homes a week. So it's it's relatively close to plan. This all is the slower season typically and so.
We do expect our next.
Phase to were out for bid right now I'm on our next set of lots and so I would say, it's it's it's moving according to plan I'm just a comment from from the equity earnings perspective, I think you know as we talk about lumpy cash earnings shouldn't be relatively stable year over year, if we're selling the amount of lots.
Per plan to get to that 1500 units and so you know as similar to last year, where we had.
Approximately $3 million of equity earnings, we we expect to have that timing on a quarter to quarter basis, and how that goes because most of it.
Geared towards the end there half of the calendar year. So we'll just have to see but generally that's how that should flow.
Alright, very good that's helpful. I appreciate you taking the time, we'll get back in Q.
I spent.
Thank you and that does conclude the question answer session and I'd like to hinder growth it's back over to Mr. Edwards for any additional for closing remarks.
Thank you for your questions and interest in Lehman era. As a reminder, we're presenting at the I see our conference Tomorrow and look forward to seeing many of you. There. Thank you again and have a great day.
Thank you that does conclude todays conference. Thank you won't see a participation you may now disconnect.
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