Limoneira CO [LMNR] Filings

10-Q 1 lmnr-20240731.htm 10-Q lmnr-20240731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended July 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period From To

Commission File Number: 001-34755


LIMONEIRA COMPANY
(Exact name of registrant as specified in its charter)


Delaware			77-0260692
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)


1141 Cummings Road
Santa Paula, CA 93060
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (805) 525-5541

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, par value $0.01	LMNR	The NASDAQ Stock Market LLC (NASDAQ Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting
company ☐

Emerging growth
company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 31, 2024, there were 18,051,901 shares outstanding of the registrant’s common stock.

LIMONEIRA COMPANY

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			4
Item 1. Financial Statements (Unaudited)			4
Consolidated Balance Sheets – July 31, 2024 and October 31, 2023			4
Consolidated Statements of Operations – three and nine months ended July 31, 2024 and 2023			5
Consolidated Statements of Comprehensive Income (Loss) – three and nine months ended July 31, 2024 and 2023			6
Consolidated Statements of Stockholders' Equity and Temporary Equity – three and nine months ended July 31, 2024 and 2023			7
Consolidated Statements of Cash Flows – nine months ended July 31, 2024 and 2023			9
Notes to Consolidated Financial Statements			11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures about Market Risk			44
Item 4. Controls and Procedures			44
PART II. OTHER INFORMATION			45
Item 1. Legal Proceedings			45
Item 1A. Risk Factors			45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45
Item 3. Defaults Upon Senior Securities			45
Item 4. Mine Safety Disclosures			45
Item 5. Other Information			45
Item 6. Exhibits			46
SIGNATURES			48

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains both historical and forward-looking statements. Forward-looking statements in this Quarterly Report are subject to a number of risks and uncertainties, some of which are beyond the Company’s control. The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied in this Quarterly Report include:

•success in executing the Company's business plans and strategies and managing the risks involved in the foregoing;

•changes in laws, regulations, rules, quotas, tariffs and import laws;

•adverse weather conditions, natural disasters and other adverse natural conditions, including freezes, rains, fires, winds and droughts that affect the production, transportation, storage, import and export of fresh produce;

•market responses to industry volume pressures;

•increased pressure from disease, insects and other pests;

•disruption of water supplies or changes in water allocations;

•disruption in the global supply chain;

•negative impacts related to the COVID-19 pandemic and our Company's responses to the pandemic;

•product and raw materials supply and pricing;

•energy supply and pricing;

•changes in interest rates and the impact of inflation;

•availability of financing for development activities;

•general economic conditions for residential and commercial real estate development;

•political changes and economic crises;

•international conflict;

•acts of terrorism;

•labor disruptions, strikes, shortages or work stoppages;

•the impact of foreign exchange rate movements;

•ability to maintain compliance with covenants under our loan agreements;

•loss of important intellectual property rights; and

•other factors disclosed in our public filings with the Securities and Exchange Commission (the “SEC”).

These forward-looking statements involve risks and uncertainties that we have identified as having the potential to cause actual results to differ materially from those contemplated herein. We have described in Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023 additional factors that could cause our actual results to differ from our projections or estimates.

The Company’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which the Company is not currently aware or which the Company currently deems immaterial could also cause the Company’s actual results to differ, including those discussed in the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. Except as required by law, we undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

All references to “we,” “us,” “our,” “our Company,” “the Company” or “Limoneira” in this Quarterly Report mean Limoneira Company, a Delaware corporation, and its consolidated subsidiaries.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LIMONEIRA COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share data)




	July 31, 2024		October 31, 2023
Assets
Current assets:
Cash	$	1,090	$	3,631
Accounts receivable, net	21,398		14,458
Cultural costs	3,302		2,334
Prepaid expenses and other current assets	5,593		5,588
Receivables/other from related parties	4,098		4,214

Total current assets	35,481		30,225
Property, plant and equipment, net	161,625		160,631
Real estate development	10,110		9,987
Equity in investments	80,375		78,816
Goodwill	1,505		1,512
Intangible assets, net	5,386		6,657
Other assets	12,831		13,382
Total assets	$	307,313	$	301,210
Liabilities, Convertible Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable	$	7,416	$	9,892
Growers and suppliers payable	11,456		9,629
Accrued liabilities	12,665		8,651
Payables to related parties	6,080		4,805

Current portion of long-term debt	594		381
Total current liabilities	38,211		33,358
Long-term liabilities:
Long-term debt, less current portion	40,049		40,628
Deferred income taxes	21,007		22,172
Other long-term liabilities	2,353		4,555
Total liabilities	101,620		100,713
Commitments and contingencies	—		—
Series B Convertible Preferred Stock – $100.00 par value (50,000 shares authorized: 14,790 shares issued and outstanding at July 31, 2024 and October 31, 2023) (8.75% coupon rate)	1,479		1,479
Series B-2 Convertible Preferred Stock – $100.00 par value (10,000 shares authorized: 9,300 shares issued and outstanding at July 31, 2024 and October 31, 2023) (4% dividend rate on liquidation value of $1,000 per share)	9,331		9,331
Stockholders' equity:
Series A Junior Participating Preferred Stock – $0.01 par value (20,000 shares authorized: zero issued or outstanding at July 31, 2024 and October 31, 2023)	—		—
Common Stock – $0.01 par value (39,000,000 shares authorized: 18,302,878 and 18,192,009 shares issued and 18,051,901 and 17,941,032 shares outstanding at July 31, 2024 and October 31, 2023, respectively)	181		179
Additional paid-in capital	169,743		168,441
Retained earnings	24,164		19,017
Accumulated other comprehensive loss	(6,380)		(5,666)
Treasury stock, at cost, 250,977 shares at July 31, 2024 and October 31, 2023	(3,493)		(3,493)
Noncontrolling interest	10,668		11,209
Total stockholders' equity	194,883		189,687
Total liabilities, convertible preferred stock and stockholders' equity	$	307,313	$	301,210

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)



	Three Months Ended July 31,				Nine Months Ended July 31,
	2024		2023		2024		2023
Net revenues:
Agribusiness	$	61,849	$	51,092	$	143,445	$	134,296
Other operations	1,456		1,405		4,197		4,172

Total net revenues	63,305		52,497		147,642		138,468
Costs and expenses:
Agribusiness	45,437		46,845		124,987		126,275
Other operations	1,250		1,034		3,861		3,281
Impairment of intangible asset	643		—		643		—
(Gain) loss on disposal of assets, net	(12)		1,545		(129)		(29,199)
Gain on legal settlement	—		—		—		(2,269)
Selling, general and administrative	6,994		4,622		21,707		19,907
Total costs and expenses	54,312		54,046		151,069		117,995
Operating income (loss)	8,993		(1,549)		(3,427)		20,473
Other income (expense):
Interest income	27		178		63		248
Interest expense, net of patronage dividends	(273)		(241)		(831)		(417)
Equity in earnings of investments, net	483		199		17,116		514
Other income (expense), net	5		(215)		224		(2,627)
Total other income (expense)	242		(79)		16,572		(2,282)
Income (loss) before income tax (provision) benefit	9,235		(1,628)		13,145		18,191
Income tax (provision) benefit	(3,019)		378		(4,051)		(5,537)
Net income (loss)	6,216		(1,250)		9,094		12,654
Net loss attributable to noncontrolling interest	377		87		481		201
Net income (loss) attributable to Limoneira Company	6,593		(1,163)		9,575		12,855
Preferred dividends	(125)		(125)		(376)		(376)
Net income (loss) applicable to common stock	$	6,468	$	(1,288)	$	9,199	$	12,479

Basic net income (loss) per common share	$	0.36	$	(0.07)	$	0.51	$	0.70

Diluted net income (loss) per common share	$	0.35	$	(0.07)	$	0.51	$	0.69

Weighted-average common shares outstanding-basic	17,756		17,621		17,701		17,597
Weighted-average common shares outstanding-diluted	18,363		17,621		17,701		18,381

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(in thousands)



	Three Months Ended July 31,				Nine Months Ended July 31,
	2024		2023		2024		2023
Net income (loss)	$	6,216	$	(1,250)	$	9,094	$	12,654
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(10)		(485)		(714)		1,688
Minimum pension liability adjustments, net of tax of $(135) for the nine months ended July 31, 2023	—		—		—		(220)
Pension settlement cost, net of tax of $756 for the nine months ended July 31, 2023	—		—		—		1,944

Total other comprehensive (loss) income, net of tax	(10)		(485)		(714)		3,412
Comprehensive income (loss)	6,206		(1,735)		8,380		16,066
Comprehensive loss attributable to noncontrolling interest	377		87		481		201
Comprehensive income (loss) attributable to Limoneira Company	$	6,583	$	(1,648)	$	8,861	$	16,267

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND TEMPORARY EQUITY (UNAUDITED)

(in thousands, except share and per share data)


	Stockholders' Equity															Temporary Equity
	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Treasury		Non- controlling		Total		Series B Preferred		Series B-2 Preferred
	Shares	Amount		Capital		Earnings		Loss		Stock		Interest		Equity		Stock		Stock
Balance at October 31, 2023	17,941,032	$	179	$	168,441	$	19,017	$	(5,666)	$	(3,493)	$	11,209	$	189,687	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,350)		—		—		—		(1,350)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	99,983	1		863		—		—		—		—		864		—		—
Exchange of common stock	(36,097)	—		(684)		—		—		—		—		(684)		—		—

Noncontrolling interest adjustment	—	—		—		—		—		—		(60)		(60)		—		—
Net loss	—	—		—		(3,585)		—		—		(92)		(3,677)		—		—
Other comprehensive loss, net of tax	—	—		—		—		(467)		—		—		(467)		—		—
Balance at January 31, 2024	18,004,918	$	180	$	168,620	$	13,957	$	(6,133)	$	(3,493)	$	11,057	$	184,188	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,348)		—		—		—		(1,348)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(33)		—		—		—		(33)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	30,808	1		1,070		—		—		—		—		1,071		—		—
Exchange of common stock	(63,070)	(1)		(1,150)		—		—		—		—		(1,151)		—		—

Net income (loss)	—	—		—		6,567		—		—		(12)		6,555		—		—
Other comprehensive loss, net of tax	—	—		—		—		(237)		—		—		(237)		—		—
Balance at April 30, 2024	17,972,656	$	180	$	168,540	$	19,050	$	(6,370)	$	(3,493)	$	11,045	$	188,952	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,354)		—		—		—		(1,354)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	79,245	1		1,203		—		—		—		—		1,204		—		—




Net income (loss)	—	—		—		6,593		—		—		(377)		6,216		—		—
Other comprehensive loss, net of tax	—	—		—		—		(10)		—		—		(10)		—		—
Balance at July 31, 2024	18,051,901	$	181	$	169,743	$	24,164	$	(6,380)	$	(3,493)	$	10,668	$	194,883	$	1,479	$	9,331

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND TEMPORARY EQUITY (UNAUDITED)

(in thousands, except share and per share data)


	Stockholders' Equity															Temporary Equity
	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Treasury		Non- controlling		Total		Series B Preferred		Series B-2 Preferred
	Shares	Amount		Capital		Earnings		(Loss) Income		Stock		Interest		Equity		Stock		Stock
Balance at October 31, 2022	17,684,315	$	177	$	165,169	$	15,500	$	(7,908)	$	(3,493)	$	11,609	$	181,054	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,337)		—		—		—		(1,337)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	146,289	1		1,063		—		—		—		—		1,064		—		—


Noncontrolling interest adjustment	—	—		—		—		—		—		(78)		(78)		—		—
Net income (loss)	—	—		—		15,631		—		—		(97)		15,534		—		—
Other comprehensive income, net of tax	—	—		—		—		3,947		—		—		3,947		—		—
Balance at January 31, 2023	17,830,604	$	178	$	166,232	$	29,669	$	(3,961)	$	(3,493)	$	11,434	$	200,059	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,348)		—		—		—		(1,348)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(33)		—		—		—		(33)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	149,900	2		963		—		—		—		—		965		—		—
Exchange of common stock	(1,594)	—		(26)		—		—		—		—		(26)		—		—


Net loss	—	—		—		(1,613)		—		—		(17)		(1,630)		—		—
Other comprehensive loss, net of tax	—	—		—		—		(50)		—		—		(50)		—		—
Balance at April 30, 2023	17,978,910	$	180	$	167,169	$	26,582	$	(4,011)	$	(3,493)	$	11,417	$	197,844	$	1,479	$	9,331
Dividends Common ($0.075 per share)	—	—		—		(1,349)		—		—		—		(1,349)		—		—
Dividends Series B ($2.19 per share)	—	—		—		(32)		—		—		—		(32)		—		—
Dividends Series B-2 ($10 per share)	—	—		—		(93)		—		—		—		(93)		—		—
Stock compensation	—	—		756		—		—		—		—		756		—		—


Net loss	—	—		—		(1,163)		—		—		(87)		(1,250)		—		—
Other comprehensive loss, net of tax	—	—		—		—		(485)		—		—		(485)		—		—
Balance at July 31, 2023	17,978,910	$	180	$	167,925	$	23,945	$	(4,496)	$	(3,493)	$	11,330	$	195,391	$	1,479	$	9,331

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)



	Nine Months Ended July 31,
	2024		2023
Operating activities
Net income	$	9,094	$	12,654
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	6,273		6,510
Impairment of intangible asset	643		—
Gain on disposal of assets, net	(129)		(29,199)

Gain on legal settlement	—		(853)
Stock compensation expense	3,139		2,785
Non-cash lease expense	1,361		1,226
Equity in earnings of investments, net	(17,116)		(514)
Cash distributions from equity investments	15,005		220
Deferred income taxes	4,051		5,537


Other, net	14		161
Changes in operating assets and liabilities:
Accounts receivable and receivables/other from related parties	(7,125)		(3,881)
Cultural costs	(973)		2,175
Prepaid expenses and other current assets	(1,381)		(336)
Other assets	(150)		19
Accounts payable and growers and suppliers payable	(668)		(4,442)
Accrued liabilities and payables to related parties	2,913		(3,073)
Income taxes payable	(2,319)		(330)
Other long-term liabilities	(1,366)		(1,247)
Net cash provided by (used in) operating activities	11,266		(12,588)

Investing activities
Capital expenditures	(6,721)		(8,960)

Net proceeds from sales of assets	950		98,526
Net proceeds from legal settlement	—		853
Net proceeds from sale of real estate development assets	—		2,577


Cash distribution from Trapani Fresh	61		82

Collection on notes receivable	66		66
Equity investment contributions and capitalized interest	(528)		(275)

Investments in mutual water companies and water rights	(512)		(511)

Net cash (used in) provided by investing activities	(6,684)		92,358

Financing activities
Borrowings of long-term debt	115,202		57,940
Repayments of long-term debt	(115,527)		(122,827)

Principal paid on finance leases and equipment financings	(520)		(323)
Dividends paid – common	(4,052)		(4,034)
Dividends paid – preferred	(376)		(376)
Exchange of common stock	(1,835)		(26)



Net cash used in financing activities	(7,108)		(69,646)

Effect of exchange rate changes on cash	(15)		26
Net (decrease) increase in cash	(2,541)		10,150
Cash at beginning of period	3,631		857
Cash at end of period	$	1,090	$	11,007

LIMONEIRA COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

(in thousands)



	Nine Months Ended July 31,
	2024		2023
Supplemental disclosures of cash flow information
Cash paid during the period for interest (net of amounts capitalized)	$	808	$	592
Cash paid during the period for income taxes, net	$	2,319	$	330
Non-cash investing and financing activities:





Capital expenditures accrued but not paid at period-end	$	348	$	—




Cancellation of loan guarantee related to equity investment	$	1,080	$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Basis of Presentation

Business

Limoneira Company (together with its consolidated subsidiaries, the “Company”) engages primarily in growing citrus and avocados, harvesting citrus, and packing, marketing and selling citrus. The Company is also engaged in residential rentals and other rental operations and real estate development activities.

The Company markets and sells citrus directly to food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia and other international markets. Through fiscal year 2023, the Company was a member of Sunkist Growers, Inc., an agricultural marketing cooperative, and sold a portion of its oranges, specialty citrus and other crops to Sunkist-licensed and other third-party packinghouses.

Basis of Presentation and Preparation

The accompanying unaudited interim consolidated financial statements include the accounts of the Company and the accounts of all the subsidiaries and investments in which the Company holds a controlling interest. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company, the unaudited interim consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these unaudited interim consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. Because the consolidated financial statements do not include all of the information and notes required by GAAP for a complete set of consolidated financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K.

2. Summary of Significant Accounting Policies

Comprehensive Income (Loss)

Comprehensive income (loss) represents all changes in a company’s net assets, except changes resulting from transactions with stockholders. Other comprehensive income or loss includes foreign currency translation items and defined benefit pension items. Accumulated other comprehensive loss is reported as a component of the Company's stockholders' equity.

The following table summarizes other comprehensive (loss) income by component (in thousands):


	Three Months Ended July 31,
	2024						2023
	Pre-tax Amount		Tax Expense		Net Amount		Pre-tax Amount		Tax Expense		Net Amount
Foreign currency translation adjustments	$	(10)	$	—	$	(10)	$	(485)	$	—	$	(485)



Other comprehensive loss	$	(10)	$	—	$	(10)	$	(485)	$	—	$	(485)


	Nine Months Ended July 31,
	2024						2023
	Pre-tax Amount		Tax Expense		Net Amount		Pre-tax Amount		Tax Benefit (Expense)		Net Amount
Foreign currency translation adjustments	$	(714)	$	—	$	(714)	$	1,688	$	—	$	1,688
Minimum pension liability adjustments:
Other comprehensive (loss) income before reclassifications	—		—		—		(355)		135		(220)
Amounts reclassified to earnings included in “Other income (expense), net”	—		—		—		2,700		(756)		1,944
Other comprehensive (loss) income	$	(714)	$	—	$	(714)	$	4,033	$	(621)	$	3,412

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

2. Summary of Significant Accounting Policies (continued)

Comprehensive Income (Loss) (continued)

The following table summarizes the changes in accumulated other comprehensive loss by component (in thousands):


	Foreign Currency Translation Loss		Defined Benefit Pension Plan		Accumulated Other Comprehensive Loss
Balance at October 31, 2023	$	(5,666)	$	—	$	(5,666)
Other comprehensive loss	(714)		—		(714)
Balance at July 31, 2024	$	(6,380)	$	—	$	(6,380)


	Foreign Currency Translation (Loss) Gain		Defined Benefit Pension Plan		Accumulated Other Comprehensive (Loss) Income
Balance at October 31, 2022	$	(6,184)	$	(1,724)	$	(7,908)
Other comprehensive income	1,688		1,724		3,412
Balance at July 31, 2023	$	(4,496)	$	—	$	(4,496)

COVID-19 Pandemic

The decline in demand for the Company's products as a result of the COVID-19 pandemic negatively impacted the Company's sales and profitability beginning in the second quarter of fiscal year 2020. The export market for fresh produce continues to experience decreased demand and the COVID-19 pandemic may continue to impact the Company's sales and profitability in future periods. The duration of these trends and the magnitude of such impacts are uncertain and therefore cannot be estimated at this time, as they are influenced by a number of factors, many of which are outside management’s control.

Recent Accounting Pronouncements

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses, the chief operating decision maker (“CODM”), and how the CODM uses the reported measure(s) of segment profit or loss. This amendment also requires that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Accounting Standards Codification Topic 280, Segment Reporting, in interim periods.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU is effective for public business entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

SEC Release No. 33-11275: The Enhancement and Standardization of Climate-Related Disclosures for Investors

In March 2024, the SEC adopted final rules under SEC Release No. 33-11275: The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires registrants to provide certain climate-related information in their registration statements and annual reports. The rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. These requirements are effective for the Company in various fiscal years, starting with its fiscal year beginning November 1, 2026. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. The Company is currently evaluating the impact of these final rules on its consolidated financial statements and disclosures.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

2. Summary of Significant Accounting Policies (continued)

Concentrations

Concentrations of credit risk with respect to revenues and accounts receivable are limited due to a large, diverse customer base. One individual customer represented 13% of revenue for the nine months ended July 31, 2024. One individual customer represented 10% of accounts receivable, net as of July 31, 2024.

No individual vendor represented more than 10% of accounts payable as of July 31, 2024.

Lemons procured from third-party growers were 73% and 53% of the Company's lemon supply for the nine months ended July 31, 2024 and 2023, respectively. One third-party grower was 14% of the Company's lemon supply for the nine months ended July 31, 2024.

The Company maintains its cash in federally insured financial institutions. The account balances at these institutions periodically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of risk related to amounts on deposit in excess of FDIC insurance coverage.

3. Asset Sales and Disposals

Northern Properties

In October 2022, the Company entered into a Purchase and Sale Agreement, as amended, (the “Agreement”) with PGIM Real Estate Finance, LLC (“PGIM”) to sell 3,537 acres of land and citrus orchards in Tulare County, California (the “Northern Properties”) for a purchase price of approximately $100,405,000. On January 25, 2023, the Board approved the Agreement creating a binding agreement of the Company to sell the Northern Properties and the transaction closed on January 31, 2023. During the quarter ended April 30, 2023, the purchase price was decreased by $397,000 for reimbursement of certain cultural costs and prepaid expenses, resulting in a final purchase price of $100,008,000. After transaction costs the Company received net proceeds of $98,411,000.

The following is a summary of the transaction (in thousands):


Net cash proceeds received	$	85,494
Debt directly repaid through the transaction	12,917
Total net proceeds received	98,411
Less: net book value of assets sold
Cultural costs	3,853
Prepaid expenses and other current assets	155
Property, plant and equipment, net	53,144
Intangible assets, net	12
Other assets	1,320
Accrued liabilities	(68)
	58,416
Gain on disposal of assets	$	39,995

The proceeds were used to pay down all of the Company’s domestic debt except the AgWest Farm Credit $40,000,000 non-revolving line of credit.

On January 31, 2023, the Company entered into a Farm Management Agreement (“FMA”) with an affiliate of PGIM to provide farming, management and operations services related to the Northern Properties. The FMA had an initial term expiring March 31, 2024, and thereafter continues from year to year unless earlier terminated under the terms of the FMA. Further, on January 31, 2023, the Company entered into a Grower Packing and Marketing Agreement to provide packing, marketing and selling services for lemons harvested on the Northern Properties for a minimum five-year term, subject to certain benchmarking standards.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

3. Asset Sales and Disposals (continued)

Yuma Property

In December 2023, the Company sold 12 acres of real property located in Yuma, Arizona for a sales price of $775,000. After transaction and closing costs, the Company recorded a gain on disposal of assets of approximately $187,000 during the quarter ended January 31, 2024.

Cadiz Ranch

In April 2023, the Company determined that citrus farming operations were economically unviable on 670 acres of leased agricultural land at the Cadiz Ranch. As a result, the Company ceased farming operations at the Cadiz Ranch, disposed of the related property, plant and equipment and recorded a loss on disposal of assets of $9,012,000 during the quarter ended April 30, 2023.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):



	July 31, 2024		October 31, 2023
Prepaid supplies and insurance	$	2,630	$	1,667
Assets held for sale	—		535
Sales tax receivable	245		490
Income taxes receivable	—		816
Lemon supplier advances	1,537		791
Other	1,181		1,289
	$	5,593	$	5,588

5. Real Estate Development

Real estate development assets are comprised primarily of land and land development costs for the East Area II property in the amount of $10,110,000 and $9,987,000 as of July 31, 2024 and October 31, 2023, respectively.

East Area I, Retained Property and East Area II

In fiscal year 2005, the Company began capitalizing the costs of two real estate development projects east of Santa Paula, California, for the development of 550 acres of land into residential units, commercial buildings and civic facilities. In November 2015 (the “Transaction Date”), the Company entered into a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of its East Area I real estate development project. To consummate the transaction, the Company formed Limoneira Lewis Community Builders, LLC (“LLCB”) as the development entity, contributed its East Area I property to LLCB, and sold a 50% interest to Lewis for $20,000,000.

The Company and LLCB also entered into a Retained Property Development Agreement on the Transaction Date (the “Retained Property Agreement”). Under the terms of the Retained Property Agreement, LLCB transferred certain contributed East Area I property, which is entitled for commercial development, back to the Company (the “Retained Property”) and arranged for the design and construction of certain improvements to the Retained Property and East Area II, subject to certain reimbursements by the Company. The balance in East Area II includes estimated costs incurred by and reimbursable to LLCB of $3,444,000 as of July 31, 2024 and October 31, 2023, which is included in payables to related parties.

In January 2018, LLCB entered into a $45,000,000 unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities. Effective as of February 22, 2023, the Loan maturity date was extended to February 22, 2024, and the maximum borrowing amount was reduced to $35,000,000. As of February 1, 2023, the interest rate on the Loan transitioned from the London Interbank Offered Rate (“LIBOR”) to the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus 2.85% and was payable monthly. Effective as of February 22, 2024, the Loan maturity date was extended to August 22, 2024 and the interest rate transitioned from the BSBY to the Secured Overnight Financing Rate ("SOFR") plus 2.85%. As of May 3, 2024, the Loan had no outstanding balance and was cancelled. As of July 31, 2024, LLCB had unaudited cash and cash equivalents of $69,856,000.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

5. Real Estate Development (continued)

East Area I, Retained Property and East Area II (continued)

In February 2018, the Company and certain principals from Lewis guaranteed the obligations under the Loan. The guarantors were jointly and severally liable for all Loan obligations in the event of default by LLCB. Additionally, a Reimbursement Agreement was executed between the Lewis guarantors and the Company, which provided for unpaid liabilities of LLCB to be shared pro-rata by the Lewis guarantors and the Company in proportion to their percentage interest in LLCB. The guarantee continued in effect until all of the Loan obligations were fully paid and the Loan terminated. The $1,080,000 estimated value of the guarantee was recorded in the Company’s consolidated balance sheets and, upon cancellation of the Loan in May 2024, was removed from other long-term liabilities and the corresponding value in equity in investments.

In October 2022, the Company entered into a joint venture with Lewis for the development of the Retained Property. The Company formed LLCB II, LLC (“LLCB II”) as the development entity, contributed the Retained Property to the joint venture and sold a 50% interest to Lewis for $7,975,000. The Company recorded a deferred gain of $465,000 on the transaction, which is included in other long-term liabilities as of July 31, 2024 and October 31, 2023. The joint venture partners will share in the capital contributions to fund project costs until loan proceeds and/or revenues are sufficient to fund the project. The Company made contributions of $400,000 and $275,000 to LLCB II during the nine months ended July 31, 2024 and 2023, respectively.

Through July 31, 2024, LLCB closed on lot sales representing 1,261 residential units since inception, including 554 residential units in the second quarter of fiscal year 2024. In June 2024, the Company received a cash distribution of $15,005,000 from LLCB.

Other Real Estate Development Projects

In fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $2,700,000, which closed in November 2022. After transaction and other costs, the Company received cash proceeds of approximately $2,577,000 and recorded an immaterial loss on disposal of assets during the three months ended January 31, 2023.

6. Equity in Investments

Equity in investments consist of the following (in thousands):


	July 31, 2024		October 31, 2023
Limoneira Lewis Community Builders, LLC	$	67,279	$	66,288
LLCB II, LLC	9,399		8,869
Limco Del Mar, Ltd. ("Del Mar")	1,737		1,832
Rosales	1,459		1,325
Romney Property Partnership	501		502
	$	80,375	$	78,816

Unconsolidated Significant Subsidiary

In accordance with Rule 10-01(b)(1) of Regulation S-X, which applies to interim reports on Form 10-Q, the Company must determine if its equity method investees are considered “significant subsidiaries.” In evaluating its investments, there are two tests utilized to determine if equity method investees are considered significant subsidiaries: the income test and the investment test. Summarized income statement information of an equity method investee is required in an interim report if either of the two tests exceed 20% in the interim periods presented. During the year-to-date interim period for the nine months ended July 31, 2024, this threshold was met for LLCB and thus summarized income statement information for LLCB is presented in this Quarterly Report on Form 10-Q. The full audited financial statements of LLCB for the years ended October 31, 2023, 2022 and 2021 were provided as exhibits to the Annual Report on Form 10-K for the fiscal year ended October 31, 2023.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

6. Equity in Investments (continued)

Unconsolidated Significant Subsidiary (continued)

The following is unaudited summarized financial information for LLCB (in thousands):


	Nine Months Ended July 31,
	2024		2023
Revenues	$	91,402	$	1,086
Cost of land sold	50,246		—
Operating expenses	276		414
Net income	$	40,880	$	672
Net income attributable to Limoneira Company	$	19,765	$	477

	July 31, 2024		October 31, 2023
Cash and cash equivalents	$	69,856	$	12,863

7. Goodwill and Intangible Assets, Net

A summary of the change in the carrying amount of goodwill is as follows (in thousands):


	Goodwill Carrying Amount
Balance at October 31, 2023	$	1,512
Foreign currency translation adjustment	(7)
Balance at July 31, 2024	$	1,505

Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable. There have been no impairment charges recorded against goodwill as of July 31, 2024.

Intangible assets consist of the following (in thousands):



	July 31, 2024							October 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life in Years
Trade names and trademarks	$	2,108	(1,258)		850		8	$	2,108	$	(1,104)	$	1,004	8
Customer relationships	2,707		(1,762)		945		8	4,037		(2,111)		1,926		9
Non-competition agreement	437		(173)		264		8	437		(132)		305		8
Acquired water and mineral rights	3,327		—		3,327		Indefinite	3,422		—		3,422		Indefinite
	$	8,579	$	(3,193)	$	5,386		$	10,004	$	(3,347)	$	6,657

Amortization expense totaled $177,000 and $178,000 for the three months ended July 31, 2024 and 2023, respectively. Amortization expense totaled $533,000 and $553,000 for the nine months ended July 31, 2024 and 2023, respectively.

In July 2024, the Company determined that the carrying value of one of its customer relationships was not recoverable, recorded an impairment charge of $643,000 and wrote off the intangible asset.

LIMONEIRA COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

7. Goodwill and Intangible Assets, Net (continued)

Estimated future amortization expense of intangible assets as of July 31, 2024 is as follows (in thousands):


2024 (remaining three months)	$	144
2025	578
2026	578
2027	294
2028	294
Thereafter	171
	$