Avocado Yields and Lemon Prices: Contradictions Emerge in Q3 2025 Earnings Calls

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 9, 2025

Financials Results

• Revenue: $47.5M, down from $63.3M in Q3 FY2024
• EPS: $-0.06 per diluted share, vs $0.35 in Q3 FY2024
• Operating Margin: Operating loss of $0.6M vs operating income of $9.0M in Q3 FY2024

Guidance:

• FY2025 fresh lemon volume expected at 4.5–5.0M cartons.
• FY2025 avocado volume ~7M lbs (lower than FY2024 due to alternate bearing).
• FY2026 lemons expected to return to profitability; lemon volume estimated at 4.0–4.5M cartons.
• Sunkist partnership to drive ~$5M annual EBITDA improvement beginning FY2026; improved pricing/utilization expected.
• Lemon pricing expected to improve in FY2026 due to anticipated shortages in Spain/Turkey.
• 700 acres of nonbearing avocados to reach full bearing in 2–4 years; larger volume gains expected in 2027.
• Expect additional real estate asset divestitures in FY2026 and ~$155M distributions over next 5 fiscal years.

Business Commentary:

* Agribusiness Revenue and Lemon Market Challenges: - Limoneira's agribusiness revenue was $45.9 million in Q3, down from $61.8 million in the previous year, primarily due to pricing pressure in the lemon market. - The decline was due to challenging lemon market conditions with pricing pressures during the first two months of the quarter.

• Avocado Business Expansion:
• The company recognized $8.5 million of avocado revenue in Q3, compared to $13.9 million in the same period last year, with approximately 5.7 million pounds sold at an average price of $1.50 per pound.

• The decrease in volume was due to the alternate bearing nature of avocado trees, but the business remains on plan for pricing and volume.

• Real Estate Development and Value Creation:

• Limoneira continues to advance its real estate development projects, with future distributions expected to total approximately $155 million over the next 5 fiscal years.

• This includes the exploration of development options for the Limco Del Mar property, which presents an opportunity for residential development addressing Ventura County's housing shortage.

• Sunkist Partnership and Cost Savings:

• The strategic partnership with Sunkist is expected to drive $5 million in annual cost savings and EBITDA enhancements starting in fiscal year 2026.
• This partnership will unlock access to new high-quality customers and operational efficiencies, positioning the citrus business for long-term value creation.

Sentiment Analysis:

• Revenue fell to $47.5M from $63.3M and swung to a $1M net loss (vs $6.5M profit). Management noted lemon pricing improved late in Q3 and expects FY2026 profitability in lemons, plus ~$5M EBITDA uplift from Sunkist. They reiterated ~$155M expected real estate distributions over 5 years and avocado volume growth from new acreage by 2027.

Q&A:

• Question from Benjamin Klieve (Lake Street Capital Markets): For Limco Del Mar, what costs should we expect through 2026 (regulatory/consulting), and how do you envision development over time—seek a 50-50 partner like Lewis or offload more of the development burden?
  Response: Entitlement costs estimated at $3–$5M over 3–5 years, mostly capitalized; Limoneira is leading now, may partner (e.g., Lewis) at development stage after entitlement unlocks initial value.

• Question from Benjamin Klieve (Lake Street Capital Markets): On lemons, how do you define normalized pricing now, and what supply constraints support better pricing into next year?
  Response: Expect pricing with a “2” in front (~$20+/carton) supported by anticipated 20–30% shortages in Spain/Turkey and imports shifting to Europe; Sunkist contracts and QSR customers should add stability.

• Question from Benjamin Klieve (Lake Street Capital Markets): Any early view on avocado volumes for 2026 given the biennial nature of the crop?
  Response: Too early for precision; 2026 looks similar to or below 2025, with the first big volume step-up expected in 2027 as new acreage matures.