Limoneira Co (LMNR) Q3 2023 Earnings: A Shift Towards an Asset-Lighter Business Model
Limoneira Co (NASDAQ:LMNR) recently held its third quarter fiscal year 2023 financial results conference call. The company's strategic shift towards an asset-lighter business model was evident in the Q3 results, with brokered lemons and other lemon sales growing 76% year over year to $8.8 million. The company also achieved farm management revenue of $5.4 million, compared to no farm management revenue last year. However, the results were impacted by lower lemon pricing and lower fresh utilization rates due to heavy rains in California, which delayed a portion of the lemon harvest and led to an industry-wide pest issue.
Financial Highlights
For the third quarter of fiscal year 2023, total net revenue was $52.5 million, compared to total net revenue of $58.9 million in the third quarter of the previous fiscal year. Agribusiness revenue was $51.1 million, compared to $57.6 million in the third quarter last year. The company recognized $3.5 million of avocado revenue in the third quarter of fiscal year 2023, compared to $12.6 million in the third quarter of fiscal year 2022. The company also recognized $1.3 million of orange revenue in the third quarter of fiscal year 2023, compared to $3.7 million in the third quarter of fiscal year 2022.
Strategic Shift and Future Plans
Limoneira has been working to identify and eliminate unproductive or unprofitable parts of its business, including the sale of nonstrategic assets, exiting farming operations in Cadiz, and terminating its long-term pension plan. These actions are expected to dramatically improve the company's margins starting in fiscal year 2024. The company is also making headway in monetizing water assets, with the recently announced water fallowing program in Yuma, Arizona expected to bring in annual proceeds of $1.3 million.
Outlook
Based on the current situation, Limoneira now expects fresh lemon volumes to be in the range of 4.7 million to 5 million cartons for fiscal year 2023. The company achieved avocado volume of 3.8 million pounds in fiscal year 2023. Based on the company's asset-lighter model transition, it expects to generate an additional $50 million of asset sales during the next nine months. The company also expects to have a steady increase in third-party grower fruit.
In conclusion, Limoneira's strategic shift towards an asset-lighter business model is showing promising results. Despite the challenges posed by weather conditions, the company is making significant progress in improving its financial performance and is well-positioned for future growth.
This article first appeared on GuruFocus.
