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Calavo Growers nears sale of Fresh Cut business

EditorIsmeta Mujdragic
Published 04/25/2024, 09:42 AM

SANTA PAULA, Calif. - Calavo Growers , Inc. (NASDAQ: NASDAQ:CVGW), a prominent player in the avocado and fresh produce sectors, announced the nearing completion of its Fresh Cut business divestiture, with a targeted closure date set for May 2024. The announcement was made during the company's Annual Meeting of Shareholders on Wednesday.

The sale of the Fresh Cut division, which includes related real estate assets, is part of Calavo's strategic realignment. The company has indicated that the proceeds from the sale will be utilized to reduce its debt burden and to provide returns to its shareholders through cash distributions.

In addition to the divestiture update, Calavo informed its investors that the internal investigation regarding potential violations of the Foreign Corrupt Practices Act (FCPA) in Mexico is concluding. The company has stated that more details will be shared with investors once available.

Calavo Growers has a long-standing reputation for providing high-quality produce, including avocados, tomatoes, and papayas, as well as a range of healthy fresh-cut fruits, vegetables, and prepared foods. With its headquarters in Santa Paula, California, Calavo operates processing plants and packing facilities across the United States and Mexico, serving a global customer base that includes retail grocery, food service, club stores, mass merchandisers, food distributors, and wholesalers.

The outcome of the FCPA investigation in Mexico remains uncertain, with the possibility of governmental agencies initiating formal inquiries. Calavo has also noted that the use of proceeds from the sale is at the discretion of the board of directors and may be influenced by the needs of the company's remaining business segments.

This news article is based on a press release statement from Calavo Growers, Inc.

InvestingPro Insights

As Calavo Growers, Inc. (NASDAQ: CVGW) approaches the completion of its Fresh Cut business divestiture, the company’s financial health and market performance provide a backdrop to the strategic move. According to InvestingPro data, Calavo's market capitalization stands at $487.37 million, reflecting the market's current valuation of the company. Despite a challenging period, with revenue showing a decline of 7.9% over the last twelve months as of Q1 2024, the company is demonstrating resilience. It is worth noting that the gross profit margin in the same period was 7.17%, which, while modest, indicates that the company is still able to generate profit above its direct costs of production.

InvestingPro Tips suggest that analysts are seeing a silver lining, with two analysts having revised their earnings expectations upwards for the upcoming period. This could be a sign of confidence in Calavo's ability to navigate through its current challenges. Moreover, Calavo has a commendable track record of maintaining dividend payments for 23 consecutive years, a testament to its commitment to shareholder returns. The dividend yield as of the latest data stands at 1.46%, which could be an attractive point for income-focused investors. However, it is essential to consider that the company is not profitable over the last twelve months as of Q1 2024, and analysts are anticipating a sales decline in the current year.

For investors looking to delve deeper into Calavo Growers’ financials and future prospects, InvestingPro offers a comprehensive suite of analytics and forecasting tools. With an additional 10 tips available on the platform, users can gain a more nuanced understanding of the company’s performance and potential. For those interested in exploring these insights, use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing your investment research with valuable data and expert analysis.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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