Q2 2026 Limoneira Co Earnings Call

June 9, 2026

Operator 1: Greetings, welcome to Limoneira's Q2 2026 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. It is now my pleasure to introduce you to our host, John Mills with ICR. Thank you. You may begin.

Operator: Greetings, welcome to Limoneira's Q2 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. It is now my pleasure to introduce you to our host, John Mills with ICR. Thank you. You may begin.

Speaker #2: It is now my pleasure to introduce you to our host, John Mills, with ICR. Thank you, you may begin. Good afternoon, everyone, and thank you for joining us for Limoneira's second quarter fiscal year 2026 conference call.

John Mills: Good afternoon, everyone, thank you for joining us for Limoneira's Q2 fiscal year 2026 conference call. On the call today are Harold Edwards, President and Chief Executive Officer, and Greg Hamm, Chief Financial Officer. By now, everyone should have access to the Q2 fiscal year 2026 earnings release, which went out today at approximately 4:05 PM Eastern Time. If you've not had a chance to view the release, it's available on the investor relations portion of the company's website at limoneira.com. This call is being webcast, a replay will be available on Limoneira's website as well. Before we begin, we'd like to remind everyone that prepared remarks contain forward-looking statements, management may make additional forward-looking statements in response to your questions.

John Mills: Good afternoon, everyone, thank you for joining us for Limoneira's Q2 fiscal year 2026 Conference Call. On the call today are Harold Edwards, President and Chief Executive Officer, and Greg Hamm, Chief Financial Officer. By now, everyone should have access to the Q2 fiscal year 2026 earnings release, which went out today at approximately 4:05PM Eastern Time. If you've not had a chance to view the release, it's available on the investor relations portion of the company's website at limoneira.com. This call is being webcast, a replay will be available on Limoneira's website as well. Before we begin, we'd like to remind everyone that prepared remarks contain forward-looking statements, management may make additional forward-looking statements in response to your questions.

Speaker #2: On the call today are Harold Edwards, President and Chief Executive Officer, and Greg Hamm, Chief Financial Officer. By now, everyone should have access to the second quarter fiscal year 2026 earnings release, which went out today at approximately 4:05 p.m. Eastern Time.

Speaker #2: If you haven't had a chance to view the release, it's available on the Investor Relations portion of the company's website at limoneira.com. This call is being webcast, and a replay will be available on Limoneira's website as well.

Speaker #2: Before we begin, we'd like to remind everyone that prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions.

Speaker #2: Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control and could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements.

John Mills: Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control, could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risks detailed in the company's Form 10-Qs and 10-Ks filed with the SEC and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether a result of new information, future events, or otherwise. Please note that during today's call, we'll be discussing non-GAAP financial measures, including results on an adjusted basis.

Speaker #2: Important factors that could cause or contribute to such differences include risks detailed in the company's Form 10-Qs and 10-Ks filed with the SEC, as well as those mentioned in the earnings release.

Speaker #2: Except as required by law, we undertake no obligation to update any forward-looking or other statements herein whether a result of new information, future events, or otherwise.

Speaker #2: Please note that during today's call, we'll be discussing non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Limoneira's ongoing results of operations, particularly when comparing underlying results from period to period.

John Mills: We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Limoneira's ongoing results of operations, particularly when comparing underlying results from period to period. We have provided as much detail as possible on any items that are discussed on an adjusted basis. Also, within the company's earnings release and in today's prepared remarks, we included adjusted EBITDA and adjusted diluted earnings per share, which are non-GAAP financial measures. A reconciliation of adjusted EBITDA and adjusted diluted EPS to the most directly comparable GAAP financial measures are included in the company's press release, which has been posted to its website. With that, it is my pleasure to turn the call over to the company's President and CEO, Mr. Harold Edwards.

Speaker #2: We've provided as much detail as possible on any items that are discussed on an adjusted basis. Also, within the company's earnings release, and in today's prepared remarks, we included adjusted EBITDA and adjusted diluted earnings per share which are non-GAAP financial measures.

Speaker #2: A reconciliation of adjusted EBITDA and adjusted diluted EPS to the most directly comparable GAAP financial measures is included in the company's press release, which has been posted to its website.

Speaker #2: And with that, it's my pleasure to turn the call over to the company's president and CEO, Mr. Harold Edwards. Thanks, John, and good afternoon, everyone.

Harold Edwards: Thanks, John, and good afternoon, everyone. Our second quarter results demonstrate continued execution of our strategic transformation to position Limoneira for long-term value creation. Our second quarter includes $23.8 million of non-cash charges, comprised of $9.3 million of impairment on the Windfall Farms property, $7.8 million loss on asset disposals primarily related to our Yuma, Arizona lemon orchards, $5.1 million of net accumulated foreign exchange losses, and $1.6 million in allowance on foreign receivables. We exceeded expectations for revenue and adjusted EBITDA in the second quarter, reinforcing our confidence in the strategic decisions we are implementing. The fundamentals of our business are strengthening as we track towards our targeted $10 million in annual selling, general, and administrative savings, excluding the second quarter allowance on foreign receivables, and benefiting from improved operational efficiency through our Sunkist partnership.

Harold Edwards: Thanks, John, and good afternoon, everyone. Our Q2 results demonstrate continued execution of our strategic transformation to position Limoneira for long-term value creation. Our second quarter includes $23.8 million of non-cash charges, comprised of $9.3 million of impairment on the Windfall Farms property, $7.8 million loss on asset disposals primarily related to our Yuma, Arizona lemon orchards, $5.1 million of net accumulated foreign exchange losses, and $1.6 million in allowance on foreign receivables. We exceeded expectations for revenue and adjusted EBITDA in the second quarter, reinforcing our confidence in the strategic decisions we are implementing. The fundamentals of our business are strengthening as we track towards our targeted $10 million in annual selling, general, and administrative savings, excluding the second quarter allowance on foreign receivables, and benefiting from improved operational efficiency through our Sunkist partnership.

Speaker #2: Our second quarter results demonstrate continued execution of our strategic transformation to position Limoneira for long-term value creation. Our second quarter includes 23.8 million dollars of non-cash charges comprised of 9.3 million dollars of impairment on the windfall farm's property, 7.8 million dollars loss on asset disposals primarily related to our Yuma, Arizona lemon orchards, 5.1 million dollars of net accumulated foreign exchange losses, and 1.6 million dollars in allowance on foreign receivables.

Speaker #2: We exceeded expectations for revenue and adjusted EBITDA in the second quarter, reinforcing our confidence in the strategic decisions we are implementing. The fundamentals of our business are strengthening as we track toward our targeted $10 million in annual selling, general, and administrative savings, excluding the second quarter allowance on foreign receivables, and benefiting from improved operational efficiency through our SunKist partnership.

Speaker #2: Our avocado production capacity continues to expand, and we increased our full-year avocado volume guidance, reflecting the strength of our growing operations. These enhancements lead us to a high level of confidence in achieving positive adjusted EBITDA in the third and fourth quarters of this year.

Harold Edwards: Our avocado production capacity continues to expand, and we increased our full-year avocado volume guidance reflecting the strength of our growing operations. These enhancements lead us to a high level of confidence in achieving positive adjusted EBITDA in the third and fourth quarters of this year. It is important to remember that Sunkist provides enhanced customer access to premium food service accounts and major US retailers through a full category citrus offering. This positions us to deliver comprehensive solutions for both food service and retail buyers while removing pricing pressure from the marketplace and strengthening both our packing margins and grower partner relationships. Considering we are now seeing lemon pricing above $20 per carton and continued high levels of fresh utilization, we are very confident in improved performance this year as a lemon grower. Another key initiative involved expanding our avocado production.

Speaker #2: It's important to remember that SunKist provides enhanced customer access to premium food service accounts and major U.S. retailers through a full-category citrus offering.

Speaker #2: This positions us to deliver comprehensive solutions for both food service and retail buyers, while removing pricing pressure from the marketplace and strengthening both our packing margins and grower partner relationships.

Speaker #2: Considering we are now seeing lemon pricing above $20 per carton, and continued high levels of fresh utilization, we are very confident in improved performance this year as a lemon grower.

Speaker #2: Another key initiative involved expanding our avocado production. Today, we have 1,700 acres planted, with only 800 acres currently bearing fruit. An additional 800 acres will begin bearing fruit over the next two to four years, representing a near 100% increase in our avocado production capacity.

Harold Edwards: Today, we have 1,700 acres planted with only 800 acres currently bearing fruit. An additional 800 acres will begin bearing fruit over the next two to four years, representing a near 100% increase in our avocado production capacity. Included are 400 acres of avocados we planted in 2023 and 2024 that are expected to set a crop this year and be additive to volume in fiscal year 2027. California avocados command premium pricing due to superior quality, and our strategic location provides logistical advantages to the highest per capita consumption markets in the Western United States. Beyond our core agricultural business, we continue to unlock value from our diversified asset base.

Speaker #2: Included are 400 acres of avocados we planted in 2023 and 2024, that are expected to set a crop this year and be additive to volume in fiscal year 2027.

Speaker #2: California avocados command premium pricing due to superior quality, and our strategic location provides logistical advantages to the highest per capita consumption markets in the western United States.

Speaker #2: Beyond our core agricultural business, we continue to unlock value from our diversified asset base. During the second quarter, we completed two strategic initiatives: our 50/50 organic recycling joint venture with Agerman to create a potential high-return platform, with the ability to process up to 295,000 tons of organic waste annually, and expected to generate substantial shared earnings when the facility becomes operational in fiscal year 2027.

Harold Edwards: During Q2, we completed two strategic initiatives: our 50/50 organic recycling joint venture with Agromin to create a potential high-return platform with the ability to process up to 295,000 tons of organic waste annually, and expected to generate substantial shared earnings when the facility becomes operational in fiscal year 2027. We executed an agreement for the partial sale of our Paso Robles, California vineyard for $16 million, which Greg will provide more details on in a moment. We've also taken decisive steps in Arizona, ceasing citrus farming operations on 600 acres of lemons to focus on water monetization by farming low water use crops, which we anticipate will make this asset significantly more profitable. Our water monetization strategy is advancing on track, and we expect a monetization event from our Class 3 Colorado River water rights in fiscal year 2026.

Speaker #2: In addition, we executed an agreement for the partial sale of our Paso Robles, California vineyard for $16 million, which Greg will provide more details on in a moment.

Speaker #2: We've also taken decisive steps in Arizona, ceasing citrus farming operations on 600 acres of lemons to focus on water monetization by farming low-water-use crops, which we anticipate will make this asset significantly more profitable.

Speaker #2: Our water monetization strategy is advancing on track, and we expect a monetization event from our Class III Colorado River water rights in fiscal year 2026.

Speaker #2: Additionally, our Santa Paula Basin conserved pumping rights represent high-value, non-operational resources that we can convert to cash while maintaining our agricultural operations. We also have our real estate development project, Harvest at Limoneira.

Harold Edwards: Our Santa Paula Basin conserved pumping rights represent high-value non-operational resources that we can convert to cash while maintaining our agricultural operations. We also have our real estate development project, Harvest at Limoneira. We continue to expect future proceeds from Harvest, Limoneira Lewis Community Builders 2, and East Area 2 to total $155 million over the next 5 fiscal years. Home sales for phase 2 continued to be robust, with 2 to 7 homes per week being sold. Phase 3 of the project consists of approximately 500 home lots, and we believe we will go to market with this phase in fiscal year 2027. We have 300 apartments approved and expect to break ground on this portion of the project in H2 of 2027.

Speaker #2: We continue to expect future proceeds from harvest, Limoneira Lewis Community Builders II, and East Area II to total $155 million over the next five fiscal years.

Speaker #2: Home sales for Phase II continued to be robust, with two to seven homes per week being sold. Phase III of the project consists of approximately 500 home lots, and we believe we will go to market with this phase in fiscal year 2027.

Speaker #2: In addition, we have 300 apartments approved and expect to break ground on this portion of the project in the second half of 2027. Part of our real estate development is a 25-acre East Area II Medical Pavilion project that we believe could begin to be monetized in fiscal year 2026.

Harold Edwards: Part of our real estate development is a 25-acre East Area 2 medical pavilion project that we believe could begin to be monetized in fiscal year 2026. We have Limco Del Mar, our 221-acre agricultural infill property, which represents a strategic asset with potential for residential development and significant long-term value creation. As we enter H2 of fiscal year 2026, we believe we are very well positioned to achieve +adjusted EBITDA and continue building the foundation for sustained profitability.

Speaker #2: Additionally, we have Limco Del Mar, our 221-acre agricultural infill property, which represents a strategic asset with potential for residential development and significant long-term value creation.

Speaker #2: In summary, as we enter the second half of fiscal year 2026, we believe we are very well positioned to achieve positive adjusted EBITDA and continue building the foundation for sustained profitability.

Speaker #2: Looking at the remainder of this year and into 2027, we expect to benefit from the Agerman joint venture—which we anticipate will contribute to earnings in 2027—further expansion of avocado acres to be planted in 2027, $10 million in savings from our SG&A improvements in 2026, increased cash flow from harvest at Limoneira, continued improvement in our SunKist relationship, and expected monetization of water rights.

Harold Edwards: Looking at the remainder of this year and into 2027, we expect to benefit from the Agromin joint venture that we expect will contribute to earnings in 2027, further expansion of avocado acres to be planted in 2027, $10 million in savings from our SG&A improvements in 2026, increased cash flow from Harvest at Limoneira, continued improvement in our Sunkist relationship, and expected monetization of water rights. We've transformed our cost structure, focused our revenue streams, optimized our asset base, and positioned ourselves for sustainable EBITDA growth, the items I just discussed have us very well positioned to unlock the tremendous asset value at Limoneira. Let me turn it over to Greg for the financial details, we'll take your questions.

Speaker #2: We've transformed our cost structure, focused our revenue streams, optimized our asset base, and positioned ourselves for sustainable EBITDA growth. The items I just discussed have us very well positioned to unlock the tremendous asset value at Limoneira.

Speaker #2: Now, let me turn it over to Greg for the financial details, and then we'll take your questions. Thank you, Harold, and good afternoon, everyone.

Greg Hamm: Thank you, Harold, and good afternoon, everyone. I'm pleased to be speaking with you today to discuss our Q2 fiscal year 2026 financial results. Our Q2 performance demonstrates meaningful progress in our strategic transformation. While we are navigating a transitional period under our Sunkist partnership, I'm encouraged to report that we exceeded expectations for revenue and adjusted EBITDA this quarter. This validates the operational improvements we've been implementing and gives us confidence as we move into the seasonally stronger H2 of our current fiscal year. Let me start by addressing the quarterly rhythm that's now fundamental to understanding our business. Under the Sunkist partnership, the seasonality of our lemon revenue has shifted. Q1 and Q2 represent our seasonally softer periods, while Q3 and Q4 will be stronger.

Speaker #2: I'm pleased to be speaking with you today to discuss our second quarter fiscal year 2026 financial results. Our second quarter performance demonstrates meaningful progress in our strategic transformation.

Speaker #2: While we are navigating a transitional period under our SunKist partnership, I'm encouraged to report that we exceeded expectations for revenue and adjusted EBITDA this quarter.

Speaker #2: This validates the operational improvements we've been implementing and gives us confidence as we move into the seasonally stronger second half of our current fiscal year.

Speaker #2: Let me start by addressing the quarterly rhythm that's now fundamental to understanding our business. Under the Sunkist partnership, the seasonality of our lemon revenue has shifted.

Speaker #2: The first and second quarters represent our seasonally softer periods, while the third and fourth quarters will be stronger. Total net revenues for the second quarter of fiscal year 2026 were $23.9 million, compared to $35.1 million in the second quarter of fiscal year 2025.

Greg Hamm: Total net revenues for Q2 fiscal year 2026 were $23.9 million, compared to $35.1 million in Q2 fiscal year 2025. AgriBusiness revenues totaled $22.5 million, compared to $33.6 million in the prior year Q2. Other operations revenue was $1.4 million, compared to $1.5 million in the prior year Q2. The year-over-year decrease in total net revenues reflects three key strategic changes. First, the Sunkist transition and its shift in the quarterly sales cadence. Second, our exit from the brokerage business and Chilean farming operations in Q1 of this year. Third, the termination of our farm management operations last fiscal year. Fresh lemon carton sales were $17.1 million in Q2 fiscal year 2026, compared to $19.7 million in the same period last year.

Speaker #2: Agribusiness revenues totaled $22.5 million, compared to $33.6 million in the prior year second quarter. Other operations revenue was $1.4 million, compared to $1.5 million in the prior year second quarter.

Speaker #2: The year-over-year decrease in total net revenues reflects three key strategic changes. First, the Sunkist transition and its shift in the quarterly sales cadence. Second, our exit from the brokerage business and Chilean farming operations in the first quarter of this year.

Speaker #2: And third, the termination of our farm management operations last fiscal year. Fresh lemon carton sales were $17.1 million in the second quarter of fiscal year 2026 compared to $19.7 million in the same period last year.

Speaker #2: We sold approximately 1,028,000 cartons of fresh lemons at an average price of $16.63 per carton during the second quarter of fiscal year 2026, compared to 1,357,000 cartons at $14.52 per carton in the prior year second quarter.

Greg Hamm: We sold approximately 1,028,000 cartons of fresh lemons at an average price of $16.63 per carton during Q2 fiscal year 2026, compared to 1,357,000 cartons at $14.52 per carton in the prior year's Q2. The decrease in volume was related to the change in cadence under the Sunkist agreement. It's important to note that per carton prices for fiscal year 2026 are net of the Sunkist marketing fee. Brokered lemons and other lemon sales were immaterial in Q2 fiscal year 2026, compared to $2.3 million in Q2 fiscal year 2025. The decrease primarily due to the sale of our Chilean farms in Q1 fiscal year 2026.

Speaker #2: The decrease in volume was related to the change in cadence under the SunKist agreement. It's important to note that per-carton prices for fiscal year 2026 are net of the SunKist marketing fee.

Speaker #2: Brokered lemons and other lemon sales were immaterial in the second quarter of fiscal year 2026, compared to $2.3 million in the second quarter of fiscal year 2025.

Speaker #2: The decrease was primarily due to the sale of our Chilean farms in the first quarter of fiscal year 2026. Turning to avocados, we delayed the harvest of a portion of our avocados and recognized nominal avocado revenue in the second quarter of fiscal year 2026, compared to $2.8 million in the prior year period.

Greg Hamm: Turning to avocados, we delayed the harvest of a portion of our avocados and recognized nominal avocado revenue in Q2 fiscal year 2026, compared to $2.8 million in the prior year period. This was a deliberate decision on our part to delay the harvest to capture better expected pricing in Q3 of this fiscal year. Orange revenue was nominal in Q2 fiscal year 2026, compared to $1.6 million in the same period last year, primarily related to the transition of citrus brokerage operations to Sunkist. Specialty citrus and wine grapes were also nominal in Q2 fiscal year 2026, compared to $700,000 in Q2 fiscal year 2025, due to the transition of our citrus brokerage operations to Sunkist.

Speaker #2: This was a deliberate decision on our part to delay the harvest to capture better expected pricing in the third quarter of this fiscal year.

Speaker #2: Orange revenue was nominal in the second quarter of fiscal year 2026 compared to $1.6 million in the same period last year, primarily related to the transition of citrus brokerage operations to SunKiss.

Speaker #2: Specialty citrus and wine grapes were also nominal in the second quarter of fiscal year 2026 compared to $700,000 in the second quarter of fiscal year 2025 due to the transition of our citrus brokerage operations to SunKiss.

Speaker #2: There was no farm management revenue in the second quarter of fiscal year 2026, compared to $300,000 in the prior-year period, due to the termination of our farm management agreement effective March 31, 2025.

Greg Hamm: There was no farm management revenue in Q2 of fiscal year 2026, compared to $300,000 in the prior year period, due to the termination of our farm management agreement effective 31 March 2025. Total costs and expenses in Q2 of fiscal year 2026 were $45.6 million, compared to $38.5 million in Q2 of last fiscal year. Driving this increase were two significant non-cash charges. We recorded a $9.3 million impairment related to the strategic sale of an 80% interest in our Windfall Farms vineyard property in Paso Robles, and a $7.8 million loss on asset disposals, primarily related to the disposal of lemon orchards in Yuma, Arizona. Combined, these non-cash charges totaled $17.1 million and were disciplined capital allocation decisions.

Speaker #2: Total costs and expenses in the second quarter of fiscal year 2026 were $45.6 million, compared to $38.5 million in the second quarter of last fiscal year.

Speaker #2: Driving this increase were two significant non-cash charges. We recorded a $9.3 million impairment related to the strategic sale of an 80% interest in our Windfall Farms vineyard property in Paso Robles, and a $7.8 million loss on asset disposals, primarily related to the disposal of lemon orchards in Yuma, Arizona.

Speaker #2: Combined, these non-cash charges totaled $17.1 million and were disciplined capital allocation decisions. The Windfall Farms transaction, which we announced in April, involves selling an 80% interest in approximately 724 acres in Paso Robles for an aggregate purchase price of $16 million.

Greg Hamm: The Windfall Farms transaction, which we announced in April, involves selling an 80% interest in approximately 724 acres in Paso Robles for an aggregate purchase price of $16 million, $10 million in cash at closing, and a $6 million seller finance note secured by a deed of trust. We're retaining 20% interest in the property. This transaction allows us to monetize a non-strategic asset, redeploy capital into higher return opportunities, and maintain upside participation in the vineyards through our retained interest. We expect this transaction to close in Q4 of fiscal year 2026. The Yuma lemon orchard disposal decision is equally strategic. We've made the decision to cease farming operations on the 600 acres of lemons that are Associated Citrus Packers' property in Yuma, Arizona. This decision aligns with our water monetization strategy.

Speaker #2: $10 million in cash at closing and a $6 million seller-finance note secured by a deed of trust. We're retaining a 20% interest in the property.

Speaker #2: This transaction allows us to monetize a non-strategic asset, redeploy capital into higher return opportunities, and maintain upside participation in the vineyards through our retained interest.

Speaker #2: We expect this transaction to close in the fourth quarter of fiscal year 2026. The Yuma lemon orchard disposal decision is equally strategic. We've made the decision to cease farming operations on the 600 acres of lemons at our Associated Citrus Packers property in Yuma, Arizona.

Speaker #2: This decision aligns with our water monetization strategy. Instead of farming marginally profitable lemon acres, we're focusing on water monetization by conserving water through crop substitution to low water use crops.

Greg Hamm: Instead of farming marginally profitable lemon acres, we're focusing on water monetization by conserving water by a crop substitution to low water use crops. We believe this makes the Arizona asset significantly more profitable on a go-forward basis. These impairment and disposal-related charges were partially offset by a decrease in agribusiness costs and expenses, a $1.1 million increase in other operating income from insurance proceeds, and a decrease in selling, general, and administration expenses. The SG&A reduction reflects our targeted $10 million in annual savings from our Sunkist partnership net of a Q2 allowance on foreign receivables. We are seeing these planned cost improvements flowing through our P&L. Operating loss for Q2 of fiscal year 2026 was $21.7 million, compared to an operating loss of $3.3 million in the prior year period.

Speaker #2: We believe this makes the Arizona asset significantly more profitable on a go-forward basis. These impairment and disposal-related charges were partially offset by a decrease in agribusiness costs and expenses, a $1.1 million increase in other operating income from insurance proceeds, and a decrease in selling, general, and administration expenses.

Speaker #2: The SG&A reduction reflects our targeted $10 million in annual savings from our SunKist partnership, net of a second-quarter allowance on foreign receivables. We are seeing these planned cost improvements flowing through our P&L.

Speaker #2: Operating loss for the second quarter of fiscal year 2026 was $21.7 million, compared to an operating loss of $3.3 million in the prior year period.

Speaker #2: The increase in operating loss was primarily due to decreased agribusiness revenues and net increased costs and expenses, which included the $17.1 million in non-cash charges I described earlier.

Greg Hamm: The increase in operating loss was primarily due to the decreased agribusiness revenues and net increased costs and expenses, which included the $17.1 million in non-cash charges I described earlier. Additionally, total other expense for Q2 of fiscal year 2026 includes $5.1 million in accumulated foreign exchange losses recognized on the Chilean farming entities. This foreign currency loss accumulated from the time we purchased the Chilean farms approximately 8 years ago, until we received proceeds from the sale of these entities.

Speaker #2: Additionally, total other expense for the second quarter of fiscal year 2026 includes $5.1 million in accumulated foreign exchange losses recognized on the Chilean farming entities.

Speaker #2: This foreign currency loss accumulated from the time we purchased the Chilean farms, approximately eight years ago, until we received proceeds from the sale of these entities.

Speaker #2: On a positive note, we received $2.3 million in aggregate insurance proceeds in March 2026 related to an incident at our packing house, partially related to repair costs we incurred in the first quarter of fiscal year 2026.

Greg Hamm: On a positive note, we received $2.3 million in aggregate insurance proceeds in March 2026 related to an incident at our packing house, partially related to repair costs we incurred in Q1 of fiscal year 2026. Of the total insurance proceeds received, $1.2 million was recognized as a reduction of agribusiness costs, and $1.1 million was recognized in other operating income during Q2 of fiscal year 2026. Net loss applicable to common stock after preferred dividends was $21.4 million, or $1.20 per diluted share in Q2 of fiscal year 2026, compared to a net loss applicable to common stock of $3.5 million, or $0.20 per diluted share in Q2 of fiscal year 2025. The increase in net loss reflects the same factors impacting total costs of expenses and operating loss described earlier. Now let me turn to our adjusted results.

Speaker #2: Of the total insurance proceeds received, $1.2 million was recognized as a reduction of agribusiness costs, and $1.1 million was recognized in other operating income during the second quarter of fiscal year 2026.

Speaker #2: Net loss applicable to common stock after preferred dividends was $21.4 million, or $1.20 per diluted share, in the second quarter of fiscal year 2026, compared to a net loss applicable to common stock of $3.5 million, or $0.20 per diluted share, in the second quarter of fiscal year 2025.

Speaker #2: The increase in net loss reflects the same factors impacting total costs and expenses, and operating loss, described earlier. Now, let me turn to our adjusted results.

Speaker #2: Adjusted net loss for diluted EPS in the second quarter of fiscal year 2026 was $5.2 million, or $0.29 per diluted share, compared to an adjusted net loss of $3.1 million, or $0.17 per diluted share, in the prior year period.

Greg Hamm: Adjusted net loss for diluted EPS in Q2 of fiscal year 2026 was $5.2 million, or $0.29 per diluted share, compared to an adjusted net loss of $3.1 million, or $0.17 per diluted share in the prior year period. A full reconciliation is provided in our earnings release. Non-GAAP adjusted EBITDA was a loss of $1.7 million in Q2 of fiscal year 2026, compared to a loss of $200,000 in the same period last year. We exceeded expectations on adjusted EBITDA in Q2 of fiscal year 2026, and a reconciliation to net loss attributable to Limoneira Company is provided in our earnings release. I want to emphasize what these Q2 results represent.

Speaker #2: A full reconciliation is provided in our earnings release. Non-GAAP adjusted EBITDA was a loss of $1.7 million in the second quarter of fiscal year 2026, compared to a loss of $200,000 in the same period last year.

Speaker #2: We exceeded expectations on adjusted EBITDA in the second quarter of fiscal year 2026, and a reconciliation to net loss attributable to Limoneira Company is provided in our earnings release.

Speaker #2: I want to emphasize what the second quarter results represent. They reflect the new seasonal cadence under our SunKiss partnership, the specific non-cash charges I described, and the strategic investments we're making to position the company for improved performance throughout the remainder of fiscal year 2026.

Greg Hamm: They reflect the new seasonal cadence under our Sunkist partnership, the specific non-cash charges I described, and the strategic investments we're making to position the company for improved performance throughout the remainder of fiscal year 2026. The underlying operational trends are positive, and we have clear visibility into accelerating performance in H2 of this fiscal year. Turning to our balance sheet, we remain in a solid position to execute on our strategic initiatives, and I expect our liquidity position to improve as we move into the seasonally stronger H2 of the fiscal year. Long-term debt as of 30 April 2026 was $93.7 million, compared to $72.5 million at the end of fiscal year 2025.

Speaker #2: The underlying operational trends are positive, and we have clear visibility into accelerating performance in the second half of this fiscal year. Turning to our balance sheet, we remain in a solid position to execute on our strategic initiatives, and I expect our liquidity position to improve as we move into the seasonally stronger second half of the fiscal year.

Speaker #2: Long-term debt as of April 30, 2026, was $93.7 million, compared to $72.5 million at the end of fiscal year 2025. The increase in debt reflects the seasonal nature of our business and the timing of cash flows.

Greg Hamm: The increase in debt reflects the seasonal nature of our business and timing of cash flows, which we expect to improve in Q3 and Q4 as our higher volume periods generate stronger cash flows. As we enter H2 of fiscal year 2026, now our seasonally stronger period, we have visibility into expected improvements in financial results. Our Q3 and Q4 should benefit from higher lemon volumes under the Sunkist agreement, increased avocado volumes as we strategically delayed harvest to capture better expected pricing, and continued operational efficiency. Now I'd like to turn the call back to Harold to discuss our fiscal year 2026 outlook and longer-term growth pipeline.

Speaker #2: We expect this to improve in the third and fourth quarters, as our higher volume periods generate stronger cash flows. As we enter the second half of fiscal year 2026—now our seasonally stronger period—we have visibility into expected improvements in financial results.

Speaker #2: Our third and fourth quarters should benefit from higher lemon volumes under the Sunkist agreement, increased avocado volumes as we strategically delayed harvest to capture better expected pricing, and continued operational efficiency.

Speaker #2: Now I'd like to turn the call back to Harold to discuss our fiscal year 2026 outlook and longer-term growth pipeline. Thank you, Greg. Looking at the remainder of fiscal year 2026, we expect to achieve positive adjusted EBITDA in the third and fourth quarters due to a large increase in avocado volumes, better lemon volume and pricing, and realization of cost savings.

Harold Edwards: Thank you, Greg. Looking at the remainder of fiscal year 2026, we expect to achieve +adjusted EBITDA in Q3 and Q4 due to a large increase in avocado volumes, better lemon volume and pricing, and realization of cost savings. For full year fiscal 2026, we are reiterating our fresh lemon volumes of 4 to 4.5 million cartons and are raising our avocado volumes to 5.5 to 6.5 million pounds. Beyond our core operations, we have several additional value creation opportunities progressing. Our real estate pipeline remains strong with $155 million in expected total proceeds over the next 5 fiscal years. The Limco Del Mar entitlement process represents another significant real estate development opportunity, and our organic recycling joint venture is expected to contribute meaningful earnings when the facility becomes operational in fiscal year 2027.

Speaker #2: For full-year fiscal 2026, we are reiterating our fresh lemon volumes of 4 to 4.5 million cartons and raising our avocado volumes to 5.5 to 6.5 million pounds.

Speaker #2: Beyond our core operations, we have several additional value creation opportunities progressing. Our real estate pipeline remains strong, with $155 million in expected total proceeds over the next five fiscal years.

Speaker #2: The Limco Del Mar entitlement process represents another significant real estate development opportunity, and our organic recycling joint ventures are expected to contribute meaningful earnings when the facility becomes operational in fiscal year 2027.

Speaker #2: We’ve built a more resilient business model that’s less dependent on commodity lemon pricing, while creating multiple engines for profitable growth. We believe we are very well positioned to begin unlocking the tremendous value in all of our assets over the next few years, and look forward to updating you on our progress.

Harold Edwards: We've built a more resilient business model that's less dependent on commodity lemon pricing while creating multiple engines for profitable growth. We believe we are very well positioned to begin unlocking the tremendous value in all of our assets over the next few years and look forward to updating you on our progress. Operator, we'll now open the call to questions.

Speaker #2: Operator, we will now open the call for questions. Thank you. With that, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

Operator 2: Thank you. With that, we will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. All right. Our first question comes from the line of Ben Klieve with Lake Street Capital Markets. Please proceed with your question.

Operator: Thank you. With that, we will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. All right. Our first question comes from the line of Ben Klieve with Lake Street Capital Markets. Please proceed with your question.

Speaker #2: You may press star two to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker #2: One moment while we pull for questions. All right. And our first question comes from the line of L. Neighbor with Lake Street Capital Markets.

Speaker #2: Please proceed with your question.

Speaker #3: Hey, guys. Thanks for taking my question. So, I noticed with harvest timing, you delayed the avocado harvest to capture better pricing, with only $285,000 sold in Q2 at $0.96 a pound.

Ben Klieve: Hey, guys. Thanks for taking my question. Notice with harvest timing, you delayed the avocado harvest to capture better pricing with only 285,000 pounds sold in Q2 at $0.96 a pound. How much volume has been pushed into Q3, and what pricing are you currently seeing in the market?

Speaker #3: So how much volume has been pushed into Q3 and what pricing are you currently seeing in the market?

Speaker #2: That's a great question. So, we pushed about $500,000 from Q2 into Q3. And right now, we're seeing pricing anywhere—so remember, pricing is a function of how many sizes and the price per size.

Harold Edwards: That's a great question. We pushed about 500,000 pounds from Q2 into Q3. Right now we're seeing pricing anywhere, so remember, pricing is a function of how many sizes and the price per size, but the peak size right now is about a 48. We're seeing about a $1.40.

Speaker #2: But the peak size right now is about a 48. And we're seeing about a dollar 40. Yeah. A dollar 40 for 48 today. So anywhere from a dollar 30 to a dollar 40.

Ben Klieve: Yeah, as of today

Harold Edwards: Yeah, a $1.40 for 48s today. Anywhere from a $1.30 to a $1.40. I would expect our blended average price to be somewhere on the order of magnitude of a $1.30, maybe.

Speaker #2: So, I would expect our blended average price to be somewhere on the order of magnitude of $1.30, maybe.

Speaker #3: Gotcha. Okay, thank you. And then, can you also give us an update on current lemon pricing per carton?

Ben Klieve: Got you. Okay. Thank you. Can you also give us an update on current lemon pricing per carton?

Speaker #2: Yeah. Lemons are also another encouraging story right now. We're seeing average pricing across all grades and sizes above $20. And Greg and I just saw a forecast for the remainder of the fiscal year that has the pricing, the average pricing across all sizes and grades, the average going up about a dollar a carton each month between now and October.

Harold Edwards: Yeah. Lemons are also another encouraging story right now. We're seeing average pricing across all grades and sizes above $20. Greg and I just saw a forecast for the remainder of the fiscal year that has the average pricing across all sizes and grades, the average going up about a dollar a carton each month between now and October. Theoretically $21 in July, $22 in August, and so on and so forth. We haven't seen that much strength in lemon pricing since 2018.

Speaker #2: So, theoretically, $21 in July, $22 in August, and so on and so forth. We haven't seen that much strength in lemon pricing since 2018.

Speaker #3: Oh, awesome. Well, good to hear. One more from me. So with Windfall Farms, kind of a little bit of a closing risk potentially. So possible role-play sale is structured with $10 million cash and a $6 million promissory note.

Ben Klieve: Oh, awesome. Well, good to hear. One more for me. With Windfall Farms, kind of a little bit of a closing risk, potentially. The Paso Robles sale is structured with $10 million cash and $6 million promissory note. What are the conditions to closing in Q4? What happens to the transaction if the buyer can't close on schedule?

Speaker #3: So what conditions to closing in what are the conditions to closing in Q4? And then what happens to the transaction if the buyer can't close on schedule?

Speaker #2: Yeah. So if the buyer can't close on schedule, the deal probably falls out of escrow. But we receive our first hard money on July 1.

Harold Edwards: Yeah. If the buyer can't close on schedule, the deal probably falls out of escrow. We receive our first hard money on 1 July, just in a matter of weeks here. The deal can close at any time after 1 July. We gave the buyer a substantial amount of time for him to complete his due diligence, which is he can extend it all the way to the end of October, at which point he'll have to fund $10 million to execute the transaction. Will owe us $2 million annually for the next three years to complete the $16 million purchase for 80% of the farm.

Speaker #2: So just in a matter of weeks here, the deal can close at any time after July 1st. We gave the buyer a substantial amount of time for him to complete his due diligence, which is, he can extend it all the way to the end of October, at which point he'll have to fund $10 million to execute the transaction.

Speaker #2: And then we'll owe us $2 million annually for the next three years to complete the $16 million purchase for 80% of the farm.

Speaker #3: Gotcha. Okay. Well, thank you. I'll hop back in the queue.

Ben Klieve: Got you. Okay. Well, thank you. I'll hop back in queue.

Speaker #2: Thank you.

Harold Edwards: Thank you.

Speaker #4: Thank you. And our next question comes from the line of Puran Sharma with Stevens, Inc. Please proceed with your question.

Operator 2: Thank you. Our next question comes from the line of Pooran Sharma with Stephens Inc. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Pooran Sharma with Stephens Inc. Please proceed with your question.

Speaker #5: Hi, this is Jack Harden on for Puran Sharma. Just to follow up on the lemon pricing and Sunkist—pricing was up year over year, despite being net of the Sunkist marketing fee.

Jack Hardin: Hi, this is Jack Hardin on for Pooran Sharma. Just to follow up on the lemon pricing and Sunkist. Pricing was up year-over-year, despite being net of the Sunkist marketing fee. How much of that improvement is mix or market/Sunkist customer access or fresh utilization?

[Analyst] (Stephens): Hi, this is Jack Hardin on for Pooran Sharma. Just to follow up on the lemon pricing and Sunkist. Pricing was up year-over-year, despite being net of the Sunkist marketing fee. How much of that improvement is mix or market/Sunkist customer access or fresh utilization?

Speaker #5: How much of that improvement is mixed, or market/Sunkist customer access, or fresh utilization?

Speaker #2: Okay, that's a great question because it's a little bit of all of the above. I would say the market is strengthening, but I would attribute the majority of the increase to the very, very strong market presence that Sunkist provides.

Harold Edwards: That's a great question because it's a little bit of all of the above. I would say the market is strengthening, but I would attribute the majority of the increase to the very strong market presence that Sunkist provides, with contract relationships with retail buyers and very strong contracts with food service buyers. Maybe and the last thing just to mention is that our fresh utilization since returning to Sunkist is the highest we've seen in years. Above 80% so far. I know we still have half the year to go, but we're off to a great start in our relationship with Sunkist.

Speaker #2: With contract relationships with retail buyers, and very strong contracts with food service buyers, maybe the last thing just to mention is that our fresh utilization since returning to Sunkist is the highest we've seen in years.

Speaker #2: Above 80% so far. I know we still have half the year to go, but we're off to a great start in our relationship with Sunkist.

Speaker #5: Awesome, thank you. And then, for the Colorado River timing, with respect to the water rights and FY26, what milestones should investors watch for between now and year-end, and what is most likely the structure?

Jack Hardin: Awesome. Thank you. Then for the Colorado River timing for the water rights in FY2026, what milestones should investors watch between now and year-end, and what is most likely the structure? Is it like fallowing agreement, outright sale, or something else?

[Analyst] (Stephens): Awesome. Thank you. Then for the Colorado River timing for the water rights in FY2026, what milestones should investors watch between now and year-end, and what is most likely the structure? Is it like fallowing agreement, outright sale, or something else?

Speaker #5: Is it following agreement, outright sale, or something else?

Speaker #2: I'll take that one. An outright sale is probably less likely than some sort of crop substitution that frees up water that's allocated to our land and makes it available to lease long-term or sell the access to the rights directly.

Greg Hamm: I'll take that one. Outright sale is probably less likely than some sort of crop substitution that frees up water that's allocated to our land and make it available to lease long-term or sell the access to the rights directly. I think as far as what needs to happen to get that done, we're keeping an eye closely on some contracts along the Colorado River with the reservoirs that are set to expire 31 December 2026. The pressure's on Bureau of Reclamation to get things moving in the right direction. At the very least, there would be an extension of the current fallowing agreements, we think there's more opportunity that we get a long-term program in place and we can monetize ourselves.

Speaker #2: And I think, as far as what needs to happen to get that done, we're keeping a close eye on some contracts along the Colorado River with the reservoirs that are set to expire December 31, 2026.

Speaker #2: So the pressure's on BLM, or Bureau of Land Management Reclamation, to get things moving in the right direction. At the very least, there would be an extension of the current following agreements, but we think there's more opportunity—that we get a long-term program in place and we can monetize ourselves.

Speaker #5: Awesome. Thanks so much.

Jack Hardin: Awesome. Thanks so much.

[Analyst] (Stephens): Awesome. Thanks so much.

Operator 2: Thank you. Once again, ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. That is star one. All right. It looks like there are no more questions at this time. I'd love to turn this floor back over to Harold Edwards for closing comments.

Operator: Thank you. Once again, ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. That is star one. All right. It looks like there are no more questions at this time. I'd love to turn this floor back over to Harold Edwards for closing comments.

Speaker #4: Thank you. And once again, ladies and gentlemen, if you'd like to ask any questions, please press star one on your telephone keypad. That is star one.

Speaker #4: All right. It looks like there are no more questions at this time. I'd like to turn the floor back over to Harold Edwards for closing comments.

Speaker #2: We'd like to thank you for your questions and your interest in Limoneira, and wish you all a very great day. Thank you.

Harold Edwards: We'd like to thank you for your questions and your interest in Limoneira. We wish you all a very great day. Thank you.

Speaker #5: Thank you much.

Greg Hamm: Thank you much.

Speaker #4: Thank you. And with that, ladies and gentlemen, this does conclude today's teleconference. And thank you for your participation and you may disconnect your lines at this time and have a wonderful rest of your day.

Operator 2: Thank you. With that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time and have a wonderful rest of your day.

Operator: Thank you. With that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time and have a wonderful rest of your day.

Q2 2026 Limoneira Co Earnings Call

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