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Calavo Growers falls short in 2Q

SANTA PAULA, Calif. (AP) -- Avocado and guacamole seller Calavo Growers Inc. said Monday that its fiscal second-quarter net income grew nearly 6 percent, thanks to a recent acquisition and a stronger avocado crop, but the results missed analyst expectations and Calavo's shares fell sharply.

Calavo, which also sells tortilla chips and salsa, said it earned $2.5 million, or 17 cents per share, for the quarter that ended April 30. That's up from $2.4 million, or 16 cents per share, in the same quarter last year. Excluding a $1.9 million expense tied to a court ruling in Mexico over income taxes for 2004, Calavo earned 30 cents per share, nearly double its adjusted profit a year earlier.

That was far short of the 45 cents per share that analysts polled by FactSet forecast on average.

Calavo's revenue rose 17 percent to $139 million, but analysts were expecting $164.1 million.

Its revenue from its fresh business fell as lower prices offset increased shipments of avocados and tomatoes. And revenue from its foods business segment, which includes prepared avocado, salsa and tortilla chips, was nearly flat at $11.2 million although its profitability improved on lower ingredient and production costs.

The company also got a boost from owning Renaissance Food Group LLC, which it acquired on June 1, 2011.

Calavo CEO Lee Cole said the quarter's performance was "outstanding" by most measures. The fresh avocado harvest in California snapped back after last year's smaller harvest. And cost controls combined with lower prices on products from Mexico and higher demand to improve the company's gross margin.

The company, based in Santa Paula, Calif., expects demand to rise for the rest of its fiscal year. It anticipates prices for avocados from Mexico staying low and, combined with a strong domestic harvest, helping its profitability.

Calavo also is expanding a packing house in Mexico, and that will increase its production.

The company did not issue a specific forecast.

Its shares fell $2.89, or 10.6 percent, to $24.29 by mid-afternoon.