Q3 2019 Earnings Call
Good day, ladies and gentlemen, and welcome to todays Limoneira third quarter 2019 earnings call. As a reminder, today's conference is being recorded I'd now like to turn the floor over to John Mills I see our please go ahead Sir.
Thank you good afternoon, everyone and thank you for joining us for Luminaires third quarter fiscal year 2019 conference call.
On the call today are Harold Edwards, President and Chief Executive Officer, and Mark Pallet Mountain Chief Financial Officer.
By now everyone should have access to the third quarter fiscal year 19 earnings release, which went out today at approximately four PM eastern time.
If you've not had a chance to view the release its available on the Investor Relations portion of the company's website at Lehman era dotcom.
This call is being webcast and a replay will be available on the luminaires website as well.
Before we begin we would like to remind everyone that prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions such statements involve a number of known and unknown risks and uncertainties many of which are outside the company's control and could cause its future results performance or achievements to differ significantly from the results performance or achievements expressed or implied by such forward looking statements important factors that could cause or contribute to such differences include risks detailed in the company's 10-K or 10-Q filed with the FCC 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 the 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. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Luminaires 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 it did they prepared remarks. We include adjusted EBITDA, which is a non-GAAP financial measure a reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measures is included in the Companys 10-Q, and press release, which has been posted to our web site.
And with that it is my pleasure to turn the call over to the company's President and CEO Mr. Harold Edwards.
Thanks, John and good afternoon, everyone.
On today's call I'll begin with a brief review of our third quarter of 2019 results and provide an update on our progress across all of our business areas. Mark will then review the financial results in more detail and I'll finish with our outlook for fiscal year 2019, and discuss our initial view of fiscal year 2020. After that we will open up the call and take your questions.
We continue to expect to achieve record domestic and international fresh lemon volume in fiscal year 2019, However, we experienced a drop in fresh lemon pricing during the first nine months of this year due to excessive rains in southern California, creating an overabundance of larger than normal fresh lemons from us as well as from the overall industry. This drill down the price per carton and lowered our fresh utilization, which we outlined in our press release, a few weeks ago.
We've now returned to a normal manifest of sizes and as we progress through the fourth quarter. Our fresh lemons are selling for an average price of approximately $21.50 per carton compared to $19 per carton in the third quarter and our fresh utilization rates have now increased back to the range of 70% to 75% from 50% in the third quarter.
For the full year of fiscal year 2019, we continue to expect to grow a treat crop of approximately 7.2 million domestic lemon cartons.
Unfortunately, due to the lower fresh utilization rate during the third quarter, our lemons grown for fiscal year 2019 will not translate into our full year goal of fresh cartons sold.
It's important to point out that the weather events that affected the overall lemon and orange industry. During the first nine months of this year offset the fact that we have achieved our grow retention goals and increased our market share.
Also the overall lemon industry continues to expand globally, and we fully expect that that that to continue for many years to come.
We continue to see lower orange prices stretching into the third quarter, which is longer than we previously expected.
I'll now shift to discussing our business segments, starting with a full review of our agribusiness.
Over the past few years, we have made important investments that have helped us position for long term growth, we've expanded our customer base to over 200 customers increased distribution by leveraging our domestic and international marketing and sales channels.
Focus on trade marketing and consumer facing strategies and increased our packing capacity.
In addition, weve significantly reduced seasonality for our customers by sourcing citrus from different global locations, giving US 365 days of fresh lemons.
We set an objective last year to recruit 500000 cartons from new outside Lemon growers and have surpassed that objective by securing over 700000 cartons to date with another 500000 fresh cartons expected by 2020.
We now have our 9700 planted agricultural acres of which approximately 1200 acres are currently nonbearing lemons, but estimated to become full bearing over the next four years beginning in 2020, we expect 300 acres to be full bearing with an additional 900 acres to be full bearing by 2023.
Beyond these 1200 acres, we have plans to plant an additional 500 acres of lemons in the next two years and believe this additional acreage will increase our global lemon supply by approximately 30% from our current level of 900000 cartons to 1.3 million cartons additional fresh cartons as the nonbearing and planned acreage become productive.
In addition, we expect to have a steady increase in third party grower fruit.
Turning now to our real estate development segment I'm happy to report the partnership between Lehman era, and the Lewis group of companies for the development of harvest at Limoneira is on track.
Phase one site improvements had been substantially completed and the joint ventures received lot deposits from Lenore and Kb home in fiscal year 2018 initial lot sales representing 210 residential units have closed year to date and we expect an additional 33 lots to close in the first quarter of fiscal year 2020.
Longer term, we are projecting approximately a $100 million in cash flow from the harvest at Limoneira project over the next seven to nine years, which was which is expected to include 1500 homes.
In addition last week, we announced the sale of a multiuse facility consisting of a retail convenience 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 in net proceeds and were record a gain of approximately $600000 in our fourth fiscal quarter of 2019, which is already included in our guidance in summary, while our year to date fiscal 2019 results have been affected by unforeseen weather conditions 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 turning to our third quarter results for the third quarter of fiscal year 2019, total net revenue was $50.9 million compared to total net revenue of $40 million in the third quarter of the previous fiscal year.
Agribusiness revenue increased to $49.6 million compared to $38.7 million in the third quarter last year.
Rental operation revenue for the third quarter of fiscal year, 2019 was $1.2 million compared to $1.3 million in the third quarter of the previous fiscal year and there were no real estate development revenues in the third quarter of fiscal year 2019 or 2018.
[noise] agribusiness revenue for the third quarter of fiscal year 2019 includes $46.4 million in lemon sales compared to $30.7 million of lemon sales. During the same period of fiscal year 2018, with the increase the result of higher volume of lemon by products, partially offset by lower prices of large lemons and lower fresh utilization.
As Harold said earlier in the call the lower pricing was due to excessive rains, we experienced during the first and second quarters of fiscal year, 2019, which led to a surplus of large fresh lemons ended the market ultimately driving down the price per carton approximately 1.876 million cartons of fresh lemons were sold during the third quarter of fiscal year 2019 at an average of $19.09 per carton compared to 992000 cartons sold at an average of $25.91 per carton during the third quarter of fiscal year 2018.
As anticipated, we recognized lower avocado revenue of $2.5 million in the third quarter of fiscal year 2019, compared to the same period last year of $5.6 million due to the excessive heat we experienced late in the third quarter last year and as we have previously stated we expect minimal contribution this fiscal year from avocados, but expect to be in a better position for increased volume in fiscal year 2020.
The company recognized $700000 of Orange revenue in the third quarter of fiscal year 2019, compared to $2 million in the same period of fiscal year 2018, due to unfavorable weather conditions for oranges, resulting in lower pricing in the quarter due to the small sizes of our oranges. The decrease was primary primarily due to lower prices, partially offset by higher volumes compared to the same period for fiscal year 2018.
There were no significant sales of specialty citrus and other crop revenues in the third quarter of fiscal year 2019, compared to $300000 in the third quarter of fiscal year 2018.
Total cost and expenses for the third quarter of fiscal year, 2019 were $48.8 million compared to $28.5 million in the third quarter of last fiscal year.
The increase in operating expenses was primarily attributable to increases in agribusiness and SGN a class.
Cost associated with the agribusiness include packing costs harvest cost growing cost and costs related to fruit procured and sold for third party growers and depreciation expense.
Operating income for the third quarter of fiscal year, 2019 was $2.1 million compared to $11.4 million in the third quarter of the previous fiscal year.
Other expense and income are comprised primarily of $1.8 million of mark to market unrealized loss on marketable securities and $800000 of interest expense, partially offset by $500000 of equity in earnings of investments.
Interest is capitalized on real estate development projects and significant construction in progress using the weighted average interest rates during the fiscal year.
We capitalized $400000 and $700000 of interest in the third quarter of fiscal years 2018 and 2018.
We realized approximately $300000 in net equity earnings from harvest at Limoneira during the third quarter and are expecting additional equity earnings during the first quarter of fiscal year 2020.
Net loss applicable to common stock after preferred dividends for the third quarter of fiscal year, 2019 was $1.1 million compared to net income of $8.1 million in the third quarter of fiscal year 2018.
Net loss per diluted share for the third quarter of fiscal year 2019 was six cents compared to net income per diluted share of 50 cents for the same period of fiscal year 2018, based on approximately $17.6 million and 16.6 million, respectively weighted average diluted common shares outstanding.
Excluding the non cash $1.8 million unrealized loss on stocking Calavo growers, inc. and $300000 in equity in earnings of Limoneira Lewis community builders for the third quarter of fiscal year 2019, adjusted net loss applicable to common stock was $100000 compared to net income of $8.2 million for the same period last fiscal year.
Excluding the unrealized loss on stocking Calavo in equity earnings from harvest at Limoneira adjusted net loss per diluted share for the third quarter of fiscal year 2019 was zero compared to net income per diluted share of 50 cents for the same period of fiscal year 2018.
Adjusted EBITDA was $3.8 million in the third quarter of fiscal year 2019, compared to $13.4 million in the same period of fiscal year 2018.
Adjusted EBITDA excludes the quarterly Mark to market non cash effect of Calavo shares and equity earnings from harvest at Limoneira.
For the nine months ended July 31, 2019 revenue increased to $134.9 million compared to $114.7 million in the same period last year operating loss for the first nine months of fiscal year 2019 was $1.9 million compared to operating income of $19.1 million in the same period last year.
Excluding the noncash $2.1 million unrealized loss on stock in Colorado, and $2.6 million of equity earnings from harvest at Limoneira for the first nine months of fiscal year 2019, adjusted net loss applicable to common stock was $3.7 million or 21 cents per share compared to adjusted net income of $13.4 million or 86 cents per share for the same period in fiscal year 2018.
Before I hand, the call back over to Harold a few comments on our balance sheet long term debt as of July 30, Onest 2019 was $109.3 million compared to $77 million at the end of fiscal year 2018.
Now I would like to turn the call back to Harold to discuss our fiscal year 2018 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, avocados, and oranges, which hasn't happened to our company in over three years for the full year of fiscal year 2019, we continue to expect to grow a treat crop of approximately 7.2 million domestic lemon cartons and Weve retained the majority of our third party growers. Unfortunately due to the lower fresh utilization rate during the third quarter, our lemons grown for fiscal year 2019 will not translate into our full year goal of fresh cartons sold based on the organic lemon carton growth. We are projecting for next year as well as the expected rebound in avocado revenue and the fact that all our recent acquisitions will have have been online for a full year. We remain excited about the long term growth of our company.
Turning to fiscal year 2019 guidance for fiscal year 2019, we expect to sell 7.7 to 8.3 million cartons of fresh lemons globally.
Included in our global Cartons estimates are the 4.5 to 5 million cartons, we expect to sell domestically through the first nine months of fiscal year 2019, we have sold 3.8 million domestic lemon cartons at an approximate average price of $21 a carton.
As we progress through the fourth quarter of the overall pricing is improving as the market supply normalizes.
We have sold approximately 1.8 million pounds of avocados at approximately one dollar and 70 cents per pound due to the excessive heat in the summer of 2018, we expect minimal revenue from avocados in fiscal year 2019.
Offsetting this temporary event will be the benefit of crop insurance for approximately $2.4 million calculated on actual avocado harvest in fiscal year 2019, we expect an increase in avocado production in fiscal year 2020.
For for fiscal year 2019, the unfavorable conditions for domestic oranges has continued to affect orange pricing throughout the industry. This is resulting in lower than previously expected pricing in the orange market in fiscal 2020, we anticipate similar volume and improved size and pricing.
Based on these factors, we expect operating loss for fiscal year 2019 to be approximately $500000 to $3 million and adjusted EBITDA is expected to be in the range of $7 million to nine and a half million dollars.
We expect fiscal year 2019 diluted loss per share results to be in the range of 10 cents.
To 20 cents per share with an estimated 17.5 million shares outstanding.
Adjusted diluted loss per share is expected to be in the range of 12 cents to 22 cents per share.
In addition, not included in adjusted earnings per share for fiscal year 2019 is a year to date benefit of $2.6 million of equity earnings from its real estate development harvest at Limoneira, and a $2.1 million unrealized loss on Calavo stock because of a normalized size curve of lemons now selling selling through and our avocado insurance payment in October we expect to be profitable in the fourth quarter.
Looking beyond 2019, we have an additional 1200 acres of nonbearing lemons that are estimated to become full bearing over the next four years, which will enable us to achieve strong organic growth for many years to come we expect the first 300 acres of the 1200 acres to become full bearing in fiscal year 2020.
Beyond these 1200 acres, we intend to plant an additional 500 acres of lemons in the next two years, which we believe will further build our long term pipeline of productive acreage. We believe this additional acreage will increase annual lemon supply from our 2019 level by approximately 30% or about 900000 to 1.3 million additional fresh cartons as the nonbearing and planned acreage becomes productive.
The company expects a full year benefit in fiscal year 2020 from the Argentina joint venture and land acquisition form with FGF Trapani.
And with that I'd now like to open the calls up to your questions operator.
Ladies and gentlemen, if you do have any questions. Please signal now by pressing star one on your telephone.
If you just make sure that your mute function is turned off.
It seems that signal once again at this time that star one for any questions.
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All right and first from Stephens, we have 10%.
Thanks for the question guys.
Have you seen or getting in the fourth have you seen anything in the forthcoming or 11 crop that would suggest that the percentage of fruit going to juice I shouldn't come back to historical levels.
At this point no the the build up of the big sizes that we experienced in the third quarter have now worked their way through the system and we've returned to inventories of a much more what we would call normal distribution of sizes in grades and as a result were seeing much improved utilization rates.
Somewhere between 70 and 75% currently but the other thing that's going on is now we've just begun harvests and.
He began to bring the fruit from the Arizona desert into our inventories and that utilization is much higher north of 80%. So we believe all of this bodes well to bring our cost back down into line driven by much more normal fresh utilization levels.
Okay. Thanks that was helpful and Mark I think this one might be more directed for you.
Do you think you could walk through the puts and takes from your previous guidance to the company's actual results during the quarter.
Sure. So you know there was when we came out with our June guidance.
You know we were we were just coming off of the Spanish crop that it had flooded the market Im just realizing that the whole industry had that overabundance of large sizes.
As we went through that and the utilization rates dropped.
From 70% to 50% over the June and July period, we saw.
Multiple things happen when you have all that fruit that has cost it I'd harvest and whatever level of packing goes right out the back door. So we saw increased packing costs of roughly we call. It about a one and a half million dollars.
Or six cents.
That was just directly.
From having lower utilization rates I.E. less units against the fixed cost.
From that the cartons that we didnt get to sell fresh that we thought they were going to go fresh was another call. It.
A $2 million or eight cents is how we looked at that it's just basically missed opportunity from the $4, where we sell it at the juice market versus the 18 to 20.
On on that and so that was that was another missed opportunity and then our plan was originally $22.
In budget at when when reality was 18 on all the cards that we did sell during that period. So thats. The lemon side of the story Navels also the decrease in price over that period in June in July which was additional from when we had talked to and in early June was another million and a half dollar slip which took naval enables almost to a $2 million loss for the year.
Which is about a $5 million swing in the prior year. So.
And basically those numbers add up to where we were originally in that 25 to 30 cents bottom of the range prior to where we brought it down to in the pre release.
Great. Thanks, I am kind of them outlet.
That was perfect I'll pass it along thanks.
And next from Roth capital, we have Jerry Sweeney.
Hi, good afternoon unheralded Mark.
Hi, Jerry.
Hey, could you talk a little bit about the third party growers at what point do they make their decisions on who's going to up for Who's Gonna pack for the.
Oh I know that you want to you were several hundred thousand above your target and you're still.
Any chance that there could be just some disgruntled a third party growers et cetera that could maybe swing the other way or any challenges.
Yes, so so typically the outside third party growers are just now right now beginning to elect who they're going to market their fruit with next year and this has just been such that.
A bad year across the industry.
That no one handler Lehman era, sunkist Paramount be suite any of the any of the.
The handlers and the Packers market are shippers really stood out far above anybody else. This year, because it was such a difficult utilization year. This year.
So we do expect some attrition and we do expect that there will be some growers that most likely choose to make a change just because of the difficult situation.
We are unaware of any of those right now we're in we're in discussions with all of our outside growers and so we we also believe that we're going to have an opportunity to pick up some growers. So the delta between what we actually recruit and what we might lose we still are directionally targeting a net gain of 500000 new cartons.
But but time will tell whether that actually takes place.
Got it and.
Maybe if you could refresh my memory, a little bit the new pack facility. What's the total capacity and then you had the acquisition, which I think was more specialty limits just.
What total capacity for each and maybe you know.
So so the theoretical capacity of the new Santa Paula packing houses 8 million cartons, but that would assume that an equal amount of fruit comes in and is packed and then goes out 12 months of the year and of course that never really works that way given the lumpiness of crop sizes and growers that we work with and so we believe that some more directly around 7 million cartons is probably theoretical that's kind of where where we are in terms of capacity in Santa Paula and then the Oxnard facility again, if you were able to bring equal amounts in and move equal amounts out and given normal storage levels and inventory levels is theoretically 4 million cartons. So somewhere between 10 to 12 million cartons is what our capacity is.
Got it.
Going out to 2020.
Just say you.
Bringing another 500000 car.
What's that total for.
Domestic for that region.
So so we think directionally the tree crop so.
It's important to think about the size of the crop across the three districts is somewhere between seven and a half and 8 million cartons and then so if we can achieve a 75% fresh utilization rate unconventional lemons, we ought to be somewhere between five and a half to 6 million cartons of conventional lemons and then put on top of that the specialty lemons of the Meyer lemons, the pink lemons the the.
Cam free lemons, the things that we do in Oxnard.
Sort of Directionally, it's a little too early to provide specific guidance, but we think directionally, it's somewhere around 6 million total cartons, which if we could pull that off I think we are going to come in somewhere mark around four and a half million cartons. This year have four six somewhere in there 4.5 to 4.6, so growth too so call it five and a half to 6 million cartons from from California, and Arizona is our is our goal or our target for 2020.
So the four and a half.
Actually next year, Yes, that's right got it yes, okay.
And then crop insurance that hits in the fourth quarter 2.4 million and I assume that sort of in your guidance in terms of.
Yes.
Yes, yes, that's all in there we're hopeful we're going to get the check here in the next two weeks.
Just right around $2.4 million.
Got it great I'll jump back in line. Thanks.
Thanks Sherri.
And next we have been Keith with National Securities.
Alright. Thank you. Our first question here I'm wondering if you can elaborate a bit more on the headwinds that you had that you are seeing in the import market. It sounds like a it sounds like those had one subsided a bit from relative to last quarter and what you saw coming out of Spain, but if you could comment a bit more on kind of the overall import market and the challenges that you're seeing there today as opposed to a few months ago that'd be great.
Sure I'll take us all the way back to about a little little little less than a year ago, but as we were coming out of the fourth quarter into the first quarter. We had an average fob in the in the U.S. industry of somewhere around $30. A carton. So it was a super strong high market, Spain, Spain had a 50% above normal crop and Turkey, which is a large producer of lemons had some sort of hyper inflationary currency impacts that made their fruit very cost competitive and so as there was this build up a big fruit and cheaper fruit much of that fruit found its way into the east coast markets in the United States.
Just given the high Fob seasoned sales prices that we were experiencing a lot of that surplus fruit found its way into the east coast markets and so that actually had a really negative impact on really beginning to bring the price down which we experienced in the first going into the second quarter. So when we when we communicated last June we were deal it dealing with.
Competitive pricing from the imports of mostly Spain that was really bring the price down and then also the beginning of the rain influence build up of the big fruit.
As all that was taking place you had imports from Argentina, and Chile that were just coming on line as we came into the third quarter that saw this weaker market, but as as a result of the build up of the big fruit. There was there was actually really attractive medium to small through pricing opportunities. So you'll see you saw a lot of those imports begin to come in into that into that smaller fruit size as the California industry, then began to normalize towards the sort of the back half of the third quarter. You saw the first picks that were coming off of the coastal California production really attacking that small fruit market and so you began to see this pendulum swing the other way where the medium to small sized fruit started to get weaker in price and the big fruit became stronger because all of a sudden there wasn't big fruit in the market to the pendulum kind of swing back the other way, where we are right. Now is we're seeing sort of norm where at the tail end of the season.
From Argentinean imports and Chile, we are almost done with which will add imports. So.
Right now the the crop is and the lemons are being supplied predominantly from the Arizona desert from actually.
Palm Springs in the co chela valet through the Imperial Valley and all the way out to the desert now.
Perfect. Thank you.
And then also question regarding kind of the impact of the soft pricing on the M&A market are you seeing kind of.
Better opportunities to maybe pick up business the more attractive valuations today than you were.
Maybe a year ago or or have valuations on the on the M&A front not really been impacted at all.
We the lag the lag period is usually a little longer so we havent necessarily seen the softening of land pricing.
But what we have seen as we are at least anecdotally hearing of a lot of acreage coming out in the orange side of the business up in the San Joaquin Valley.
Whether that's actually going and then translate into reduced land pricing or create more acquisition opportunities. We do expect it will create more M&A activity, but and more opportunity.
At at what values, we're still not sure.
Got it okay, perfect and then.
I apologize if you if you.
Talked about this and I missed it but regarding the 500 additional acres of women that you're planning.
Can you comment on where that acreage is go is going to be.
Yes, so a portion of that will be here on the coast.
Probably more towards half of it 250 acres.
There will be.
A little bit of it in Arizona and then we're doing.
100 acres down in Chile, as well, which is on that San Pablo Ranch.
Got it okay perfect.
Thanks for taking my questions that does it for me I'll get back in queue.
Thank you.
Next we have Eric Larson with Buckingham Research group.
Yes, thanks, good afternoon everybody.
Could you just give us a quick recap of.
How is your acquisitions have done year to date, and then you're going to be getting.
Continued contribution and F 20 can you can you help us.
Cow parcel together, what the what the.
Earnings impact of those would be.
Happy to Eric So three three main acquisitions of talk about.
Maybe to begin with the.
San Pablo Ranch and the additional interest in Rosalez packing has performed.
On plan with our own expectations kind of right on our own internal.
Pro forma expectations.
Mark Directionally.
Yes, so San Pablo will be or is it about a 400000 carton ranch right now and and growing up.
Not quite at its full production yet should contribute.
About a million to an EBITDA.
Well going forward.
Also.
The first for the other ranch in Chile tend to do car, which is which is growing up that will be about the same.
So about call it 2.5 million of EBITDA from the Chilean Ranch operations.
And then another million and a half.
From resolves of which we own.
40%.
From the Argentina perspective.
It should produce about a million to a million two cartons were really going to try to get more granular when we come out with guidance for next year on the international Cartons, which I think will help everybody.
But that directionally.
Should do about 4 million in EBITDA of which we are.
A 51% majority owner of that and then the way we look at Oxford, our Lemon is solely basically on the contribution of the cartons that we retained so if you remember the goal was to retain 80% or about 2 million cartons running through our new house, which effectively has a contribution anywhere between $2 and two in a quarter a carton so.
If if if we did 6 million carton next year.
Thats, a $12 million to $14 million contribution on that.
Got it okay.
Remind me how many how many months of Ochsner do you pick up and F 20.
I forget to call in add on that.
Of our started it will be a full 12 months yet.
Yes, it will be the full 12 months, but you've received what's the incremental.
What would be the incremental.
Yes, you're going to you're going to pick up how much your box not I guess, it's a question in 19 sorry.
Yes, about 2 million cartons, and so the issue with the Ocs target. It. It performed on plan. In fact ahead of plan. The issue became the fresh utilization across all of the all the other lemons and so it was really the cost that end biting us because of on that increased volume. We also had those increased cost because we ended up having to shift much of the inventory to juice.
Got it okay perfect. Thank you guys.
Thanks, Eric.
And another reminder, ladies and gentlemen that star one if you do have any questions.
We'll move on to Chris Krueger with Lake Street capital markets.
Hi, good afternoon.
Chris Hi, Chris.
Hi, most of my questions have been answered, but just a couple of.
Couple of quick ones I know you guys just sold the convenient store gas station property are there other assets that are non core that you could be looking to sell in the next year or so.
Yes, so we've been working diligently on.
Disposing of our remaining two assets in the Santa Maria marketplace. If you recall, we we actually had land that was potentially developable.
Zoned residential someone's zone of zone commercially.
That we have attracted buyers to we've negotiated price and we're just trying to get through a tenuous escrow period, but we're optimistic that we'll be able to unload those for a combined value mark of six to 7 million $6 million to $7 million and we're hopeful we'll execute that in 2020.
Good.
Then the the grape growing properties like can you refresh our memory on.
The longer term plan is for that I cant remember there was a property that was potentially going to be sold as individual vineyards or or what's going on there.
Yes, so it's a 720 acre piece of property by the end of 2019 will have approximately 430 of what will eventually be 500 acres of wine grapes planted the oldest planting now is in its.
Fourth leaf.
It's been a it's been a great crop this year.
And so we believe that directionally that the properties will will will produce somewhere around six to eight tons an acre on some of these older wine grapes that are planted and.
Right now because of the productivity that we have that we're experiencing in the vineyard as well as some of the high quality contracts that we've got in place with Coppola Vogel, Justin Duck, corn, whom I forgetting lender and the wine group.
Right now our focus is just to continue to build out the the property agriculturally. The the property does have a.
A an underlying.
Parcel map that was perfected in the in the 19 thirties. It allows that that property be to be subdivided into 76.
10 acre or smaller parcels. So eventually there may be.
A an opportunity to to parcel off some of those parcels.
And monetize their value into potential vineyard estates, but right now we're really focusing on on developing the property agriculturally and rich receiving the return on invested capital just agriculturally on that property.
Got it that's all for me thanks.
Thanks, Chris.
And ladies gentlemen, just one more minor star one if you have any questions.
Okay.
All right and it looks like a with no further questions from the audience that does conclude the question and answer section of today's call I'd like to turn the floor back to CEO Harold Edwards for any additional or closing remarks.
Thank you for your questions and interest in Limoneira, we look forward to updating you again in January on our fourth quarter call and providing full year fiscal 2020 guidance. Thank you again and have a great day.
And once again, ladies gentlemen that concludes our call. Thanks again for joining US you may now disconnect.