Limoneira Co · NASDAQ:LMNR
Limoneira — Investor Day (June 2023)
64 slides from Limoneira's investor day presentation, Jun 26, 2023
Slide 1: 2023 Investor Day
2023 Investor Day June 26, 2023
Slide 2: Disclosure. Forward-Looking Statements
2 Disclosure. Forward - Looking Statements This presentation contains forward - looking statements, including guidance for fiscal years 2023 and beyond, within the meaning o f Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. T
Slide 3: Welcome Remarks
LIMONEIRA’ Welcome Remarks
Slide 4: Agenda
Financial Perspective Mark Palamountain, Chief Financial Officer 4 Agenda. ESG Initiatives Amy Fukutomi, Vice President of Compliance and Corporate Secretary Past, Present & Future Harold Edwards, President and Chief Executive Officer Question & Answer Session Real Estate Development & Property Sale
Slide 5: Today's Presenters
Today’s Presenters. Harold Edwards President / CEO Mark Palamountain Chief Financial Officer John Carter Vice President of Citrus Operations 33 years industry experience Joined Limoneira in 2003 Member of one of the farming families associated with the Company over its long history 25 years finance
Slide 6: Past, Present & Future
Past, Present & Future ΠHarold Edwards President & Chief Executive Officer
Slide 7: Mission Statement
Mission Statement Limoneira is an agricultural and development company that seeks to not only maximize value for its customers and shareholders, but to enhance its legacy as a steward of both its natural and human resources.
Slide 8: Philosophy
Philosophy Limoneira’s objective is to provide high quality products and services. While in pursuit of that objective we will adhere to the highest standards of integrity and fairness in our relationships with employees, customers, shareholders, suppliers and our community Furthermore, it is our obl
Slide 9: Limoneira Through the Years
Limoneira incorporated with 413 acres by co - founders Wallace Libbey Hardison and Nathan Weston Blanchard 1893 Olivelands 2,300 acres added 1906 Limoneira started first private insectary in CA to cultivate beneficial insects 1917 Original packing house built in Santa Paula 1919 The first avocados p
Slide 10: Limoneira Through the Years
Acquisition of 757 acres of citrus orchards in San Joaquin Valley known as the Sheldon Ranch 2015 Formation of Limoneira Lewis Community Builders, LLC 2015 Upgraded packing house in Santa Paula 2016 Acquired majority of Pan de Azucar S.A. near La Serena, Chile 2017 Groundbreaking of Master Planned C
Slide 11: Well-Positioned for Continued Global Expansion and Move to Asset-Lighter Model
5,800 U.S. FRUIT - BEARING ACRES 1 11 Limoneira is Well - Positioned for Continued Global Expansion and Move to an Asset - Lighter Business Model. Year - round global supplier of citrus that eliminates seasonality for customers Real Estate Development Project expected revenue spread out over next si
Slide 12: Three Primary Drivers Fueling Long-Term Growth
12 Three Primary Drivers Fueling Long - Term Growth. Non - Core Revenue Stream Citrus Real Estate Avocados Identified $180M of near - term assets for sale; $130M already realized Expect $115M from Harvest at Limoneira ; including cash proceeds received in FY22 Packaging Line Efficiencies, Productivi
Slide 13: Strategic Objectives and Priorities
2 3 4 1 13 Strategic Objectives and Priorities. Expanding One World of Citrus Œ “Asset - Lighter” Business Model Improving ESG Efforts Unlocking Market Value of Non - Strategic Assets Real Estate Developments
Slide 14: Expected Outcomes of Strategic Objectives and Priorities
Reduce debt and right - size the balance sheet 14 Expected Outcomes of Strategic Objectives and Priorities. Increase EBITDA and Dividend Per Share Transition One World of Citrus Œ to an “asset - lighter” model including the expansion of services Improve Return on Invested Capital (ROIC) Improve cons
Slide 15: Progress to Date
Pivoted in San Joaquin Valley to farming services provider, packer, marketer and seller 15 Progress to Date. Established a new 3 - year fallowing program in Yuma, AZ that will drive ~$1.3M of additional revenue from not farming ~600 of total 1,300 acres Developed a grower services team that recruite
Slide 16: What's Next
Add value to avocados beyond production in packing, marketing and selling as a complement to One World of Citrus product offerings 16 What’s Next. Potential additional fallowing/monetization opportunities in Yuma, AZ by the end of 2026 and begin to monetize water rights in Santa Paula Water Basin Mo
Slide 17: Transition to Asset-Lighter Business Model
17 Transition to “Asset - Lighter” Business Model. • Limoneira’s domestic supply of lemons comes from three growing regions in Arizona and California: District I, II and III • Due to varying harvest cycles, Limoneira needs the three distinct areas in order to have a year - round supply of lemons • L
Slide 18: Increase in Asset-Lighter Volume Expected to Reduce Pricing Volatility
18 Increase in Asset - Lighter Volume Expected to Reduce Impact of Pricing Volatility and Tie to Commodity Pricing. Every $1 change in price $2.5M change in EBITDA
Slide 19: $25M of Planned Incremental EBITDA Growth by FY2028
19 $25M of Planned Incremental EBITDA Growth by FY 2028. Assumes: » 15M cartons of lemons @ $20 average price per carton » No additional debt » New packing house in Chile Dollars in Millions *Items completed includes operations eliminated in Cadiz, retirement plan terminated and new 3 - yr fallowing
Slide 20: District I: San Joaquin Valley
20 District I: San Joaquin Valley (November to May). Today • 3,000 acres • 100% farm management services • 1M cartons of lemons annually • Farm management services fee of $750k to $1M annually 2028 Goal • 5,000 acres • 100% farm management services • 2M cartons of lemons annually = +$2M EBITDA • Far
Slide 21: District II: Ventura County Coast
21 District II: Ventura County Coast (March to July). Today • 3,000 acres • 50% Limoneira / 50% outside growers • 3M cartons annually • Grower partner packing and marketing / distribution target of $2.00 - $2.50 per carton margin 2028 Goal • 5,000 acres • 30% Limoniera / 70% outside growers • 5M car
Slide 22: District III: Desert
22 District III: Desert (August to January). Today • 700 acres • 36% Limoneira / 64% outside growers • 700k cartons annually • Grower partner packing and marketing / distribution target of $2.00 - $2.50 per carton margin • 600 acres • 3 - yr fallowing program = ~$1.3M benefit annually ($2,240/acre)
Slide 23: Agency / Brokerage
23 Agency / Brokerage. Today • 1M cartons annually • 8% commission, with target of $1.50 to $2.50 per carton margin 2028 Goal • 3M cartons annually • 8% commission, with target of $1.50 to $2.50 per carton margin $4M total increase in EBITDA by 2028
Slide 24: Target 2028 – Domestic Lemons
Supply and demand growth fueled by grower partner sourcing 24 Target 2028 – Domestic Lemons. 2.30 0.20 2.50 2.90 1.60 4.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 2023 Growth 2028 Cartons (MM) Limoneira Domestic Annual Lemon Volume Targets Limoneira Grower Partner 5.2 MM 1.8 MM 7.0 MM
Slide 25: New Chile Packing House
25 New Chile Packing House. Today • 1.5M cartons annually • 48% of packing economics $1.00 to $1.50 per carton • 8% selling commission, with target of $1.50 to $2.50 per carton margin 2028 Goal • New Chile packing house that requires ~$25M investment, to be funded from sale of Chilean farming assets
Slide 26: $25M EBITDA Growth Initiative Summary
26 $25M EBITDA Growth Initiative Summary. District I: San Joaquin Valley • $4M total increase in EBITDA by 2028 District II: Ventura County Coast • $5M total increase in EBITDA by 2028 District III: Desert • $2M total increase in EBITDA by 2028 Agency / Brokerage • $4M total increase in EBITDA by 20
Slide 27: One World of Citrus & Avocado
One World of Citrus & Avocado ΠJohn Carter Vice President of Citrus Operations
Slide 28: Year-round global supplier of citrus that eliminates seasonality
Year - round global supplier of citrus that eliminates seasonality for customers. 28 Lemons Avocados Oranges Global End Markets DAYS PER YEAR DAYS PER WEEK HOURS PER DAY 300k MEXICAN & SOUTH AFRICAN SOURCED GROWERS 365 / 24 / 7 6.5M CARTONS OF FRESH LEMONS SOLD IN 2022 1 Billion Lemons
Slide 29: Three-pronged operating model
Our three pronged operating model helps fulfill end customer’s fruit needs 29 Providing a Critical Link Between Highly Fragmented Citrus & Avocado Growers and Diverse End Markets. Growing / Farm Mgmt. Packing Marketing / Distribution Fruit grown or farmed , packed and marketed / distributed by LMNR
Slide 30: Market Leader Within a Highly Fragmented Space
High - quality products Integrated farm - to - customer supply chain Low - cost production Diverse global sourcing and distribution network Superior product mix Global scale and customer base 30 Market Leader Within a Highly Fragmented Space. Limoneira Delivers COMPARED TO ~4% IN 2011 UP 228% ~14% O
Slide 31: Exclusive Relationship with Apeel Sciences
Limoneira is Apeel’s first, fully integrated lemon supplier in the U.S. 31 Exclusive Relationship with Apeel Sciences. Committed to Delivering the World’s Best Lemons • Apeel’s non - GMO, edible, plant - based coating technology slows water loss and oxidation to help keep produce fresh for longer. •
Slide 32: Highly Automated Packing Platform
32 Transformed Our Packing Facility Into a Highly Automated Packing Platform. Current Packing Facility $29 M was spent modernizing and streamlining facilities to be state - of - the - art (in 2016) 14% more lemons packed 25% increase in third - party packings Facilities are currently operating at ~7
Slide 33: CosTrco
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Slide 34: New Farm Management Services Division
34 New Farm Management Services Division. • Established a cross - functional grower services team to recruit and retain grower partners • 130 - years experience growing, packing, marketing and selling citrus • One of the best fresh utilization rates in the market; 78% in FY22 • Exclusive relationshi
Slide 35: Expect Long-Term Growth in Lemons
$94 $104 $150 $138 $143 $143 2017 2018 2019 2020 2021 2022 $24 $25 $21 $19 $20 $19 2017 2018 2019 2020 2021 2022 35 REVENUE Dollars in Millions 80% of 2022 agricultural revenue 12.8% current U.S. market share Growth target of 25% U.S. market share 3,900 planted acres 3,500 current producing acres >2
Slide 36: Expect Long-Term Growth in Avocados
$10 $7 $5 $9 $7 $17 2017 2018 2019 2020 2021 2022 36 Expect Long - Term Growth in Avocados. REVENUE Dollars in Millions 10% of 2022 agricultural revenue 2.2% U.S. market share one of the largest growers 900 planted acres 800 current producing acres; anticipated growth of 250 new acres 98% Hass avoca
Slide 37: Real Estate Development & Property Sales
Real Estate Development & Property Sales ΠHarold Edwards President & Chief Executive Officer
Slide 38: Future Conversion of Select Non-Core Land
Profits from sale of non - essential assets and real estate development will be used to reduce existing debt, fund acquisitions, as investment to increase farming efficiencies and to expand packing capabilities 38 Future Conversion of Select Non - Core Land.
Slide 39: Future Asset Monetization
39 Future Asset Monetization. $180 Million of Near - Term Asset Sales Have Been Identified: Commercial Property in Harvest at Limoneira Closed October 26, 2022 $8 million in cash proceeds Oxnard Lemon Property Closed October 31, 2022 $20 million in cash proceeds Santa Maria Property Closed November
Slide 40: Fair Market Value Greater Than Net Book Value
40 Fair Market Value Greater Than Net Book Value. AS OF JANUARY 31, 2023 ACRES FMV 1 NET BOOK VALUE Real estate development assets 500 $100M – $150M $79M Agricultural assets (land, buildings, orchards, water) 11,300 $450M – $550M $172M Other assets $25M – $30M $13M Less estimated current net debt ($
Slide 41: Significant Valuation in Ownership Over Water Rights
41 Holding Significant Valuation in Ownership Over Water Rights. Water Assets Water rights, usage rights, and water pumping rights associated with Limoneira land ~ 21,000+ ACRE FEET OF OWNED WATER RIGHTS $10k – $40k PER ACRE FOOT Range of recent water rights sales in CA/AZ Substantial investments ma
Slide 42: Water Assets Beginning to Monetize
42 Water Assets Beginning to Monetize. Yuma, AZ • Current fallowing program in Yuma, AZ is 3 - year deal that will drive ~$1.3M of additional revenue from not farming ~600 of 1,300 acres ($2,240/acre) • Next fallowing program in Yuma, AZ potentially could be 25 - year deal that must be in place by e
Slide 43: Premium Land Owned in Southern California, Arizona, Chile, Argentina
43 Premium Land Owned in Southern California, Arizona, Chile, Argentina, and a Variety of Commercial Properties. Land in Chile & Argentina Office Buildings District II & III Packinghouses Premium land Commercial property Premium land and commercial property assets La Serena, Chile Jujuy, Argentina P
Slide 44: Harvest at Limoneira
44 Harvest at Limoneira .
Slide 45: Diversified Revenue Stream Includes Monetizing Non-Core Agribusiness Land
Diversified Revenue Stream Includes Monetizing Non - Core Agribusiness Land. 45 Limoneira entered a partnership with the Lewis Group of Companies to develop “Harvest at Limoneira” — a residential and commercial real estate project. Nationally Recognized Homebuilder Partners Expect $107 million of re
Slide 46: Harvest at Limoneira
Harvest at Limoneira. LIMONEIRA
Slide 47: Harvest at Limoneira: East Area 1
47 Harvest at Limoneira : East Area 1.
Slide 48: Harvest Medical Pavilion
48 Harvest Medical Pavilion. 32.5 ACRES OF EAST AREA 2 INTENDED FOR MEDICAL CAMPUS LOT 1 TO BE DEDICATED MEDICAL OFFICE BUILDINGS LOT 2 TO AN ACUTE CARE HOSPITAL EAST AREA 2 STRATEGICALLY LOCATED CLOSE TO HARVEST AT LIMONEIRA DEVELOPMENT PROJECT POTENTIAL COMMUNITY COLLEGE CAMPUS POTENTIAL HOTEL POT
Slide 49: Harvest at Limoneira Cash Flow Projections
49 Harvest at Limoneira . CURRENT HARVEST AT LIMONEIRA CASH FLOW PROJECTIONS Fiscal Years 2022A 2023E 2024E 2025E 2026E 2027E 2028E Total Annual Projected Distribution $8M $5M $8M $17M $25M $30M $22M PROJECT STATUS Cash Flow Potential Approximately $135M over the life of the project (of which $28M h
Slide 50: Harvest at Limoneira Community Review
Harvest at Limoneira Community Overview • Currently, the project is approved for 1,500 homesites • 586 homesites have been sold to builders • Builders have sold 579 homes and closed 545 of the homes (as of 3/13/23) Lots/Homes • Complete Phase I of the Sports Park and turn it over to the City for pub
Slide 51: Harvest at Limoneira Market Highlights
Market Highlights • Increase in interest rates caused a significant slow down in new home sales during the second half of 2022 Nationally • Home sales prices fell during the second half of 2022 • Builders stopped buying land but are starting to show interest Southern California • Limited new home an
Slide 52: ESG Initiatives
ESG Initiatives ΠAmy Fukutomi Vice President of Compliance / Corporate Secretary
Slide 53: Continued Commitment to Improve ESG Scores
53 Invest in regenerative agricultural practices and continued investment in diversity, equity and inclusion Invest Focus on sustainability, and continued alignment with United Nations Sustainable Development Goals Focus Evolve governance structure and ESG framework Evolve Limoneira’s ISS ESG score
Slide 54: Evolution of Board Structure and Composition
54 Evolution of Board Structure and Composition to Enhance Effectiveness. Evolving Governance Structure 1 2 3 4 New committee leadership to affect positive change Key Milestones Establishing best governance practices 1 2 3 4 Refreshed and right - sized board to 7 members Scott Slater appointed Chair
Slide 55: Innovating New Methods of Protecting Water
Limoneira addresses water scarcity and potential negative impacts on community water resources by maintaining a careful balance between water demand and supply — and by driving efficiencies in water use. 55 Innovating New Methods of Protecting Water. Moisture sensors determine when trees need water
Slide 56: Commitment to ESG is Deeply Embedded in Culture
Limoneira has been treading lightly on the land since its founding 130 years ago — long before sustainability entered the modern lexicon. 56 Commitment to ESG is Deeply Embedded in Culture. Investment in cutting - edge water management technology reduces water consumption in drought - prone enviornm
Slide 57: Investing in the Power of People
57 Investing in the Power of People. One of the first agricultural employers to offer on - campus housing to their workers reducing the greenhouse gas emissions related to commuting Donated over $2.5 million to support schools, community and industry organizations in Ventura, Santa Barbara, San Luis
Slide 58: Financial Perspective
Financial Perspective Mark Palamountain Chief Financial Officer
Slide 59: Driving DPS Growth Through Increased Revenue and Operational Efficiencies
Driving DPS Growth Through Increased Revenue and Operational Efficiencies. $121 $129 $171 $165 $166 $185 2017 2018 2019 2020 2021 2022 REVENUE ($M) $0.22 $0.25 $0.30 $0.30 $0.30 $0.30 2017 2018 2019 2020 2021 2022 DIVIDENDS PER SHARE Annual dividend has increased by over the past 5 years 36% +8.9% C
Slide 60: Positioned to Realize Financial Growth in FY 2023
$121 $129 $171 $165 $166 $185 2017 2018 2019 2020 2021 2022 REVENUE ($M) $20 $19 $22 $4 $7 $13 2016 2017 2018 2019 2020 2021 2022 EBITDA ($M) 60 Positioned to Realize Financial Growth in FY 2023. The Company expects cartons of fresh lemons AND pounds of avocados in FY23 5.0 - 5.4M 3.0 - 4.0M ($13)
Slide 61: Deleveraging Balance Sheet
61 Deleveraging Balance Sheet. $89 $61 $68 $89 $88 $102 $76 $105 $122 $130 $103 $28 $32 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q23 2Q23 NET DEBT ($M)
Slide 62: FY 2023 Highlights
Established a new 3 - year fallowing program in Yuma, AZ for ~600 of 1,300 acres generating ~$1.3M/year 62 FY 2023 Highlights. Established a 5 - year packing, marketing and sales agreement with Prudential for 1M cartons of lemons on Northern Properties Sold Sevilla property for $2.6M and Northern Pr
Slide 63: Positioned for Long Term Profitable Growth
63 Positioned for Long Term Profitable Growth. Projections THE COMPANY EXPECTS TO RECEIVE from Harvest at Limoneira spread out over the next six fiscal years , with first proceeds received in FY22. $107 M 700 Additional acres of non - bearing lemons estimated to become full bearing over the next fou
Slide 64: Q&A
LIMONEIRA’ Q&A