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Calavo Growers stock soars 12% as earnings and revenue top expectations

EditorRachael Rajan
Published 06/10/2024, 04:57 PM
Updated 06/10/2024, 04:58 PM
© Reuters.

SANTA PAULA, Calif. - Calavo Growers , Inc. (NASDAQ:CVGW), a leading global avocado industry player, has reported a substantial beat on both earnings and revenue for its fiscal second quarter ended April 30, 2024.

The company's adjusted EPS came in at $0.50, significantly surpassing the analyst consensus of $0.38. Revenue also exceeded expectations, reaching $184.4 million against the predicted $165.78 million.

The company's shares jumped 12.5% following the announcement.

Calavo's performance was driven by a 16.5% increase in total net sales compared to the same quarter last year, with the Grown segment sales rising by 18.9% and the Prepared segment experiencing a slight decrease of 1.9%.

President and CEO Lee Cole attributed the strong results to improved prices and margins in their core avocado business, as well as a solid performance in tomatoes. He also noted the meaningful improvements in the guacamole business through favorable input costs and operational efficiency.

The Grown segment's gross profit surged by 27% YoY, bolstered by higher avocado margins and a more than double increase in tomato business gross profit. Despite a volume decline of 13% in avocados, the company's strategy to prioritize margin over volume paid off, with avocado prices approximately 28% higher than the previous year.

The Prepared segment, which now excludes the fresh cut business due to its planned divestiture, saw a gross profit increase of 40% YoY. This improvement was primarily driven by lower fruit input costs and the divestiture of the salsa business.

Looking ahead, Calavo expects robust performance to continue into the third quarter. The company is also working diligently to complete the sale of the fresh cut business, with negotiations ongoing and a completion target set for the fiscal third quarter.

Calavo ended the quarter with $48.5 million of net debt and approximately $47.3 million of liquidity as of April 30, 2024. The Board declared a quarterly cash dividend of $0.10 per share, to be paid on July 30, 2024, to shareholders of record as of July 2, 2024.

"We are pleased with our second quarter results, which reflect strong operational performance across our portfolio, demonstrating Calavo's earnings capacity," said CEO Lee Cole. He emphasized the company's focus on maximizing value in its core businesses and expressed optimism for the third quarter.

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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