Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Limoneira Co (NASDAQ:LMNR)
Q4 2019 Earnings Call
Jan 13, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Limoneira Fourth Quarter 2019 Earnings Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Mr. John Mills of ICR. Please go ahead, sir.

John Mills -- Investor Relations

Great. Thank you. Good afternoon, everyone, and thank you for joining us for Limoneira's fourth quarter fiscal year 2019 conference call. On the call today are Harold Edwards, President and Chief Executive Officer; and Mark Palamountain, Chief Financial Officer.

By now, everyone should have access to the fourth quarter of fiscal year 2019 earnings release, which went out today at approximately 4:00 PM Eastern Time. If you've not had a chance to view the release, it's available on the Investor Relations portion of the Company's website at limoneira.com. This call is being webcast and a replay will be available on Limoneira's website as well.

Before we begin, we'd like to remind everyone that prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the Company's control and could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include risk details in the Company's 10-Qs and 10-Ks filed with the SEC, and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether a result of new information, future events or otherwise.

Please note that during today's call, we will be discussing non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Limoneira's ongoing results of operations, particularly when comparing underlying results from period-to-period. We've provided as much detail as possible on any items that are discussed on an adjusted basis. Also, within the Company's earnings release and in today's prepared remarks, we included adjusted EBITDA, which is the non-GAAP financial measure. A reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measures is included in the Company's 10-K and press release, which has been posted to the website.

And with that, it is my pleasure to turn the call over to the Company's President and CEO, Mr. Harold Edwards.

Harold Edwards -- President and Chief Executive Officer

Thanks, John, and good afternoon, everyone. On today's call, I will provide a brief overview of our operational results in fiscal 2019 and an update on our progress across all of our business areas as we enter fiscal year 2020. Mark will then review the financial results in more detail and I'll finish with our reiterated outlook for fiscal year 2020. After that, we will open up the call and take your questions.

We achieved record revenue in fiscal 2019. However, uncontrollable weather events affected lemon and orange pricing and fresh utilization throughout the year and dramatically reduced our avocado crop for fiscal year 2019. Our lemon volume was very strong in fiscal year 2019 as we grew a record tree crop. Unfortunately, due to the lower fresh utilization rate for part of the year and lower pricing due to sizing of fruit, our record volumes did not translate into our expected bottom line profits. It is important to point out that the weather events that affected the overall lemon and orange industry throughout the year offset the fact that we increased our market share.

Also, the overall lemon industry continues to expand globally, and we fully expect that to continue for many years to come. As we enter fiscal year 2020, pricing per carton has improved, and our fresh utilization rates have now increased back to a range of 70% to 75% from a low of 50% in the third quarter last year. We experienced strong wins during the first quarter on our ranches in Southern California and this could affect the grade of a portion of our lemons, which could negatively impact the overall grade of lemons we harvest later this year. Even with this effect, we believe we will see prices increase over last year.

I'm pleased that with the temporary challenges we faced in fiscal year 2019, we still were able to generate positive adjusted EBITDA, close a strategic acquisition and are very well positioned to continue our market share growth and return to strong adjusted EBITDA results in fiscal year 2020.

I'll now shift to discussing our business segments starting with a full review of our agribusiness. Over the past few years, we have made important investments that have us positioned for long-term growth and improved efficiencies. We've expanded our customer base to over 250 customers, including leading restaurants and grocery store chains. We've been able to achieve this expansion by leveraging our domestic and international marketing and sales channels, focusing more on trade marketing, and consumer-facing strategies and utilizing our increased packing capacity.

In addition, we've significantly reduced seasonality for our customers by sourcing citrus from different global locations giving us 365 days of fresh lemon supply. A great example of this global expansion is the joint venture we closed this year. In May of 2019, we acquired a 51% interest in a joint venture, Trapani Fresh, formed with FGF Trapani, a multi-generational family owned citrus operation in Argentina.

Also, in fiscal year 2019, we surpassed our new carton goal by securing over 700,000 cartons with another 500,000 fresh cartons expected by the end of 2020. We now have over 9,700 planted agricultural acres, of which approximately 1,200 acres are currently non-bearing lemons but estimated to become full bearing over the next four years. In 2020, we expect 300 acres of these acres to be full bearing with an additional 300 acres to be full bearing by 2021 and the remaining 600 to become full bearing by 2023. Beyond these 1,200 acres, we have plans to plant an additional 250 acres of lemons in the next two years and believe this additional acreage will increase our domestic supply of Limoneira-owned lemons by approximately 50% from our current level of 900,000 cartons to 1.3 million additional fresh cartons as the non-bearing and planned acreage become productive. In addition, we expect to have a steady increase in third-party grower fruit.

Turning to avocados. In fiscal year 2019, our production was down due to the previously announced extreme heat that affected production. As expected, we recognized minimal avocado revenue in 2019 but we will be back to normal production in fiscal year 2020.

Turning now to our real estate development segment. I'm happy to report that the partnership between Limoneira and The Lewis Group of Companies for the development of Harvest at Limoneira is on track. Phase 1 site improvements have been substantially completed and the joint ventures received a lot deposits from Lennar and KB Home's in fiscal year 2018. Initial lot sales representing 210 residential units closed in fiscal 2019, and we recently closed an additional 33 in the first quarter of fiscal year 2020. Longer term, we are projecting approximately $100 million in cash flow from the Harvest at Limoneira project over the next six years to nine years, which is expected to include 1,500 homes.

In addition, during the fourth quarter, we announced the sale of a multi-use facility consisting of a retail convenience store, gas station, car wash and quick serve restaurant located in Santa Paula, California. The transaction closed on August 30, 2019 and we received approximately $4 million in net proceeds and recorded a gain of approximately $600,000 in the fourth quarter.

Lastly, in October of 2019, we sold The Terraces at Pacific Crest for approximately $3 million. We received net proceeds of $2.9 million and recognized a gain of approximately $400,000 in the fourth quarter.

In summary, while our full-year fiscal 2019 results were affected by unforeseen weather conditions, it is a temporary hurdle and does not diminish the inroads we have made to position us for solid growth and improve profitability in the coming years.

And with that, I'll now turn the call over to Mark.

Mark Palamountain -- Chief Financial Officer

Thank you, Harold, and good afternoon, everyone. I will discuss some of the details of our financial results for the fourth quarter and full-year ended October 31, 2019. I'd like to reiterate to everyone that due to the seasonal nature of our business, revenue is driven by varying harvest periods from year-to-year, and therefore, we believe it is prudent to view our business on an annual basis, not a quarterly basis. Historically, our first and fourth quarters are the seasonally softer quarters, while our second and third quarters are stronger.

For the fourth quarter of fiscal year 2019, total net revenue was $36.5 million, compared to total net revenue of $14.7 million in the fourth quarter of the previous fiscal year. Agribusiness revenue was $35.3 million, compared to $13.5 million in the fourth quarter last year. The increase was primarily due to higher lemon volume offset by lower fresh lemon prices and lower fresh utilization. Rental operations revenue was $1.2 million in fiscal year 2019, similar to the fourth quarter of last year.

Agribusiness revenue for the fourth quarter of fiscal year 2019 includes $17 million of fresh lemon sales, compared to $7.1 million of fresh lemon sales during the same period of fiscal year 2018. The increase resulted from higher lemon volume offset by lower fresh lemon prices and lower fresh utilization. Approximately 793,000 cartons of fresh lemons were sold during the fourth quarter of fiscal year 2019 at a $21.46 average price per carton, compared to approximately 239,000 cartons sold at a $29.71 average price per carton during the fourth quarter of fiscal year 2018.

Additionally, brokered and other lemon sales increased approximately $7 million in the fourth quarter of fiscal year 2019, primarily as a result of adopting new revenue recognition standards. As anticipated, the Company recognized $2.3 million of revenue from an avocado insurance payment related to the excessive heat in the summer of 2018 that dramatically affected avocado production in fiscal 2019, compared to minimal revenue in the fourth quarter of last fiscal year.

The Company recognized $2.1 million of orange revenue in the fourth quarter of fiscal year 2019, compared to $300,000 in the same period of fiscal year 2018, primarily attributable to a $1.4 million increase in brokered oranges sold under the new revenue recognition standards. Specialty citrus and other crop revenues were $2.1 million in the fourth quarter of fiscal year 2019, compared to $1.4 million in the fourth quarter of fiscal year 2018. The increase was primarily due to increased wine grape and pistachio revenues.

Total costs and expenses for the fourth quarter of fiscal year 2019 increased to $40.1 million, compared to $24.3 million in the fourth quarter of last fiscal year. The fourth quarter of fiscal year 2019 increase in operating expenses was primarily attributable to increases in agribusiness costs and expenses due to increased volume of third-party grower lemons packed and sold and increased selling, general and administrative costs due to the acquisition of Trapani Fresh. Cost associated with the Company's agribusiness include packing costs, harvest costs, growing costs, costs related to the fruit procured and sold for third-party growers and depreciation expense.

Operating loss for the fourth quarter of fiscal year 2019 was $3.6 million, compared to a loss of $9.6 million in the fourth quarter of the previous fiscal year. Net loss applicable to common stock, after preferred dividends, for the fourth quarter of fiscal year 2019 was $3.2 million and compares to a net loss of $3.4 million in the fourth quarter of fiscal year 2018. Net loss per diluted share for the fourth quarter of fiscal 2019 was $0.18 and $0.19 for fiscal year 2018.

Excluding the non-cash unrealized gain on stock in Calavo Growers, equity in earnings of Limoneira Lewis Community Builders and a gain on sale of property assets for the fourth quarter of fiscal year 2019, adjusted net loss applicable to common stock was $4.2 million or $0.24 per diluted share, compared to fourth quarter of fiscal year 2018 net loss of $5.3 million or $0.30 per diluted share, which excludes the $4.2 million realized gain on stock in Calavo and $1.6 million non-cash impairment of Santa Maria real estate assets.

Adjusted EBITDA was a loss of $2.1 million in the fourth quarter of fiscal year 2019 compared to a loss of $1.2 million in the same period of fiscal year 2018. A reconciliation of adjusted EBITDA to net income is provided at the end of this release.

For the fiscal year ended October 31, 2019, revenue increased to $171.4 million, compared to $129.4 million for the fiscal year ended October 31, 2018. Operating loss for the fiscal year 2019 was $5.5 million, compared to an operating income of $9.5 million for the fiscal year 2018. Net loss applicable to common stock, after preferred dividends, was $6.4 million for the fiscal year 2019, compared to a net income of $19.7 million for the fiscal year 2018. Net loss per diluted share for the fiscal year 2019 was $0.37, compared to a net income per diluted share of $1.25 for the fiscal year 2018.

Excluding the gain on asset sales of $1.1 million, $2.1 million non-cash unrealized loss on stock in Calavo and $2.9 million in equity earnings of Limoneira Lewis Community Builders for the fiscal year 2019, adjusted net loss applicable to common stock was $7.8 million or $0.45 per share. This compares to adjusted net income of $7.9 million or $0.50 per diluted share for the same period in fiscal year 2018, which excludes a $10.3 million or $0.63 per diluted share, non-cash one-time tax benefits associated with the decrease in its deferred tax liability during the first quarter of fiscal year 2018, a $4.2 million gain from the sale of Calavo Growers stock and a $1.6 million or $0.07 per diluted share non-cash impairment of Santa Maria real estate assets during the fourth quarter of fiscal year 2018. Per share data is based on approximately 17.6 million and 16.2 million shares, respectively, weighted average diluted common shares outstanding.

Adjusted EBITDA for the fiscal year 2019 was $1.9 million, compared to $23.4 million in the same period last year. A reconciliation of adjusted EBITDA to net income is provided at the end of this release.

Before I hand the call back over to Harold, a few comments on our balance sheet. Long-term debt as of October 31, 2019, was $105.9 million, compared to $77 million at the end of fiscal year 2018. We expect to be free cash flow breakeven in 2020.

Now, I would like to turn the call back to Harold to discuss our fiscal year 2020 outlook.

Harold Edwards -- President and Chief Executive Officer

Thank you, Mark. We achieved a number of goals this year, but the weather had an adverse effect on our bottom line in our three main crops of lemons, avocados and oranges, which hasn't happened to our Company in over 30 years. For the full-year of fiscal year 2019, we grew a record tree crop with our lemons. Based on the organic lemon growth, we are projecting for fiscal year 2020, as well as the expected rebound in avocado revenue and the fact that all of our recent acquisitions will have been online for a full year, we remain excited about the long-term growth of our Company.

Turning to our fiscal year 2020 guidance. In order to simplify our guidance and use metrics that we believe will help you better understand how the operational assets of our Company are performing, we are providing adjusted EBITDA guidance and lemon volume guidance by cartons and will not be providing earnings per share guidance going forward. We believe adjusted EBITDA can facilitate a more complete analysis and greater transparency into our ongoing results of operations and remove certain non-cash items that can create fluctuations in its earnings per share.

Excluding the non-cash mark-to-market on stock in Calavo and equity in earnings from Harvest at Limoneira, adjusted EBITDA for fiscal year 2020 is expected to be in the range of $22 million to $26 million. For fiscal year 2020, we believe our domestic and international affiliates are expecting to sell 7.5 million to 9.5 million cartons of fresh lemons globally. Included in the global cartons estimates, are 5 million to 6 million cartons the Company expects to sell domestically. Looking on 2020, we expect approximately $100 million in cash flow from Harvest at Limoneira over the six- to nine-year life of that project. The Company expects a full-year benefit from the Argentina joint venture formed with FGF Trapani and land acquisition in fiscal year 2020.

And with that, I'd like to open the call up to your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] We'll take our first question from Ben Bienvenu with Stephens, Inc. Please go ahead.

Ben Bienvenu -- Stephens, Inc. -- Analyst

Hey, good afternoon, guys.

Harold Edwards -- President and Chief Executive Officer

Hi, Ben.

Mark Palamountain -- Chief Financial Officer

Hi, Ben.

Ben Bienvenu -- Stephens, Inc. -- Analyst

I want to start and ask about the carton guidance. The global guidance, 7.5 million to 9.5 million, and the domestic guidance of 5 million to 6 million. So it's a bit wider range than we've seen historically. I'm just curious, the elements within that guidance that drive variability from one into the other. And then Harold you mentioned comments, I think, briefly on wins in the first quarter. Any comments you could make that would help fill in and provide color on that would be helpful as it relates to the full year, to the extent, you have visibility at this point?

Harold Edwards -- President and Chief Executive Officer

Yeah. I'd be happy to Ben. So, the tree crops across each of the districts domestically, so D3 in the desert, D1 up in the San Joaquin Valley and D2 on the California Coast, are essentially the same as the prior year. Not significantly more fruit. Last year, as we made comments to, was a record tree crop year. This year seems to be a similar year. At this point with -- we've returned back to a normal distribution of size and grades, which bodes very well for our ability to market and sell high levels of fresh utilization, which was our primary challenge last year.

With that said, we believe though that, as we've engaged in more food service contract sales, will see the crops from district one and district two, which is the -- basically the spring and the summer crops, begin to move forward, which may have an impact of selling smaller, greener fruit, which is great from a fresh sales perspective, but could influence the volume that we sell and -- meaning that we would sell fewer fresh cartons, but typically that's associated with higher pricing opportunities for us. So that's the reason we stretched out the ranges, because we think the tree crop is there. We feel very confident that we'll have at or normal fresh utilization rates. But if our Harvest strategy brings more fruit off earlier, we could see a fewer cartons going out at this point higher pricing than we initial thought. So it's that volume-price relationship that we play with every day as we sort of view what mother nature's giving us on our trees.

Ben Bienvenu -- Stephens, Inc. -- Analyst

Okay. That's great. And then maybe just following on there. You mentioned high wins in the quarter-to-date period. What visibility do you have at this point? And just any elaboration, if you can on that, if not, we're happy to wait till next quarter to get a state of the union?

Harold Edwards -- President and Chief Executive Officer

We won't know for sure until we get to the next quarter, but every year in the early fall season into the early winter season we experience -- we can experience strong Santa Ana winds and this year was no exception. We had a number of high wind events, and typically what that does, Ben, is that, will often challenge the quality of the fruit and what might normally be sold as a number one grade -- fancy grade at a high price. Now, may because it has scarring, the fruit may be scarred. It may be downgraded to a choice grade, or in the most extreme cases, a standard grade. And the reason we mentioned it is because typically that will manifest itself in pricing due to unfavorable product mixes because we'll have more choice fruit than fancy fruit. So, we mentioned the wind events just as a sort of a caution to potential pricing. At this point, we don't have enough visibility to say one way or the other that our pricing will be challenged because of that quality but because the wind, we had significant wind events, we wanted to get it out there. So that in the event if we saw a higher percentage of choice for standard fruit sales, which brought our overall pricing down, we'll be able to point to that.

Ben Bienvenu -- Stephens, Inc. -- Analyst

Okay. Great. Mark, you made some comments about the balance sheet toward the end of the prepared remarks. I'm curious, can you help us think about how you think about the balance sheet today and whether you think it gives us the flexibility to continue to be acquisitive. You guys have been opportunistic historically on M&A and have made some great deals. So just curious to get a sense of how calibrated you are this year for pursuing continued opportunistic M&A versus deleveraging the balance sheet?

Mark Palamountain -- Chief Financial Officer

Yeah, sure. And that's a great question, Ben. I think, typically, we like to look at on an EBITDA perspective sort of 3 times to 5 times, 4 times we're comfortable with. Obviously, right now we're on the higher end of that, right out in front of us we do see cash flows from Harvest coming, which will be at the end of '21 and '22. So kind of not there yet.

I think from an acquisition perspective, or capex as well, there were -- we're going to be on hold for the moment. We've made a few acquisitions, obviously, in the last few years, which we're digesting well. I think the South America stuff will be sort of the next focus of the leg for capex, specifically into Chile. We've started on plans of looking at building basically replicating what we did in Santa Paula in the packing house, and putting more money down there and doubling the production over the next five years to seven years. So that probably won't take place until later this year, the beginning of next year, is my take. Just -- we want to get this year out in front of us. We, obviously, had the year we had last year and so building up the coppers I think is a good idea for us and any opportunistic sale we have of real estate assets that are around we are continuing to look at. So, we definitely are very balance sheet focused and it will be a priority this year to manage that.

Ben Bienvenu -- Stephens, Inc. -- Analyst

Okay. Great. Thanks and good luck with this year. Thanks for taking my questions.

Mark Palamountain -- Chief Financial Officer

Thank you, Ben.

Operator

Thank you. We'll now take our next question from Vincent Anderson with Stifel. Please go ahead.

Vincent Anderson -- Stifel, Nicolaus & Company -- Analyst

Yeah. Thanks. Can you hear me OK?

Harold Edwards -- President and Chief Executive Officer

Yeah.

Vincent Anderson -- Stifel, Nicolaus & Company -- Analyst

Hello? Okay, excellent. I was hoping you could give us a little bit more detail on what your assumptions are for non-US lemon sales this year. I mean, it looks like you have some interesting opportunities with Europe expected to be off in terms of production? And then any update on your Asian customer portfolio growth? Just trying to see what's already in that guidance and how much could just be some incremental upside?

Harold Edwards -- President and Chief Executive Officer

Yeah, great question, Vince. So, this year we're very optimistic from a customer perspective on being able to move a very high percentage of the crop from around the world into the Southeast Asian markets. With that said, though, those markets are heavily driven by quality. And so, if we're able to harvest a higher percentage of fancy fruit, that fruit typically commands premium pricing in the Japanese, Korean and other Southeast Asian tiger countries. But if we're not able to come up with a high percentage of fancy fruit, then typically the choice grades will stay closer to home domestically. If we are able to achieve what we think directionally our estimates of fancy grade production in district one and district two for the remainder of the year, then we should be about 30% of our total crop exported into the Southeast Asian markets. If we don't get that quality then we would sort of bring that down more to a 25% export opportunity. Right now we're seeing very strong export movement. We are seeing excellent quality coming from the field and sort of, as anticipated, product mixes and grade mixes between fancy choice and standard grades.

So, at least to this point, we seem to be on track with our plan and on track to achieve the volume targets that we made. As baked into the guidance that we gave on an EBITDA perspective, is an assumed lemon price of $22.50 a carton.

Vincent Anderson -- Stifel, Nicolaus & Company -- Analyst

That's great. Thank you. So now that we're entering in the next few years we'll see a pretty steady stream of new acres coming on. Can you just go back to remind us of one, the timing difference between when you stop capitalizing new acreage expense and when the trees actually hit full fresh fruit yields and then how that kind of shapes up from an operating leverage perspective in that two to three years of acres first coming online, so to speak?

Mark Palamountain -- Chief Financial Officer

Sure, absolutely. So, typically it takes seven years for a tree to what we'll call full production. From a financial perspective, we capitalize those, and then we call it full bearing in the fifth year, so four years of capitalization of expense. And so, over that period of time it's -- once we get to that fifth year, we'll call it, we're about 65% to 70% of what we think full production is and then anywhere between the seventh and 10th year we'll get to what we'll call 100% and that's different obviously in different regions. In the Coast, it's different than in the desert, which is lower, etc. And so, from -- and looking at that from the 900,000 to 1.2 million cartons [Technical Issues] like to think about our cost as approximately $16 to $17 per carton depending on region. And so, we look at a price now of $22.50 and we're looking at about a $6 to $7 profit a carton in the prior years, sometimes that gets as high as $12, $14. It just depends on the pricing environment. So you did at times of million cartons in your that you're additional operating income that you should expect to see from those acres.

Vincent Anderson -- Stifel, Nicolaus & Company -- Analyst

Great. Thanks. And just sneak in one more here market question. I was hoping you could comment on the depressed fancy premium that, at least we're observing and mainly the mid-size one in grades. It looks like they're at really decade lows. I'm not sure if that's Mexican fruit, improving in quality or a shift in market presence -- preference. But just curious on your thoughts there, whether it's sustainable. If it stays low like this, how you optimize your marketing around those kinds of conditions?

Harold Edwards -- President and Chief Executive Officer

So the main thing that hit us last year and you'll remember this very well, Vince, was beginning right about now, the Spanish crop was 1.5 times normal crop and with the surplus production much of that fruit found its way into the East Coast markets at very, very low pricing. And from a grade perspective, it was all choice, there were some fancy but it was mostly choice grade fruit and that was really what put the beginning of the pricing pressure on the overall markets. This year the Spanish crop is down, the Egyptian crop is down and the Turkish crop is down, so there is going to be a little bit less export pressure or imported fruit pressure in the East Coast markets. Now, that's not to say there aren't other lemons coming from other places into those markets. But it's not as crowded this year as it was last year. And so, we believe that that will give us a good opportunity to ship in at fairly decent pricing into those markets.

We, as I've mentioned in earlier discussions, we've moved to higher percentages of contractual business with both our food service customers and our retail customers at good pricing levels and that's fantastic because it gives us a great steady idea of fruit flow we can have, if we're able to put the boxes up based on our partnership with Mother Nature. So that's -- we've got the table set to have a pretty good year from a utilization perspective and we think that pricing assumption that we've sort of put in there is achievable, but we'll just have to continue to report on it as we go through the year based on our experience of what Mother Nature provides to us from a grade and size perspective, but also how the markets respond also to the competitive pressure of imported fruits from other places.

Vincent Anderson -- Stifel, Nicolaus & Company -- Analyst

All right. Thank you.

Harold Edwards -- President and Chief Executive Officer

Thanks, Vince.

Operator

Thank you. [Operator Instructions] We'll hear now from Eric Larson with Buckingham Research Group.

Eric Larson -- Buckingham Research Group -- Analyst

Hello, everyone. Can you hear me?

Harold Edwards -- President and Chief Executive Officer

We got you, Eric.

Mark Palamountain -- Chief Financial Officer

Hi, Eric.

Eric Larson -- Buckingham Research Group -- Analyst

Hey, guys. So, I think this might come out in the 10-K, but what was your average selling price for fresh lemons in 2019, Harold?

Harold Edwards -- President and Chief Executive Officer

I think it was $21, I think.

Eric Larson -- Buckingham Research Group -- Analyst

And then I just wanted to just confirming this and I think you just said that directionally you think it could be as much just $22.50 per carton next year, is that correct?

Harold Edwards -- President and Chief Executive Officer

Yeah. So the assumption we made [Technical Issues] that we gave was sort of a midpoint of $22.50.

Eric Larson -- Buckingham Research Group -- Analyst

Okay. I got it.

Harold Edwards -- President and Chief Executive Officer

Mark just showed me, it was $21.46 in 2019 was the average selling price per carton.

Eric Larson -- Buckingham Research Group -- Analyst

Okay. Okay. And if you could just very quickly give us just a little kind of a checklist, what would be the things that would move their price up and what could potentially be the factors that move the price down?

Harold Edwards -- President and Chief Executive Officer

Okay. So there are several dynamics to that and the answers are, we could make something that is seemingly simple, very complicated, but included in this list of what can drive it up, our market opportunities where demand exceeds supply, which typically gives us pricing opportunity. So that's the first thing.

Eric Larson -- Buckingham Research Group -- Analyst

Right.

Harold Edwards -- President and Chief Executive Officer

[Technical Issues] very heavily is if your percentage of higher-grade fruit based on what the tree produces is greater than your expectation and we'd be selling more fancy fruit, which typically commands a higher price than our choice grade fruit or our standard grade fruit. Conversely, what can drive the price down is when you have supply exceeds demand situations in markets and that typically takes pricing -- it's -- in essence it's a commodity and the commodity impact is lower pricing in that event, but also a consistent with the grade situation. If you have a lower percentage of fancy grade and a higher percentage of standard grade or choice grade, that from a product mix perspective of what we sell can take its toll and have a pretty significant impact on pricing.

Anecdotally, what I can tell you right now. Eric, is that, the domestic market is experiencing a kind of steady flow of what we assumed was utilization of fancy grade and choice grade. Pricing is somewhere between $20 and $22 a carton domestically and the export markets are $24 a carton. And the impact of all of that is sort of keeping us pretty close to that $22 to $23 a carton range right now. Now, as we look forward into the year, that will continue to change. We believe that that gives us -- is going to give us an opportunity to see price increase opportunities, but we'll just have to report on it as we go quarter-to-quarter based on the realities again of what our trees actually give us versus what the market wants.

Eric Larson -- Buckingham Research Group -- Analyst

Yeah. No. I was just trying -- last year was such an unusual year. I was just trying to get -- I understand kind of the supply demand side on each end of the positive and the negative side. I was just trying to get a feel for exactly the things that may or may not repeat themselves next year that could give either some upside in the pricing or potential downside net pricing. So, we can talk a little bit more about that offline. But the other question that I have is, you had roughly 50% utilization, I believe for the full year. I know that was kind of the fourth quarter, is that the right assumption to make and should we be thinking kind of the 70% to 80% utilization for next year, is that how we should look at it?

Harold Edwards -- President and Chief Executive Officer

Yeah. So actually what happened, Eric, last year was district three which we started the year with in the desert had normal and actually excellent utilization rates. We came in it 75% to 80% fresh utilization in the desert. And then the crop shift up into the valley and up until two weeks till the end of the season, we were having normal utilization levels, call it, 70% to 73% fresh utilization. And then it started to rain. And as the rains impacted our ability to harvest in the valley and then also in the Coast, we were unable to get into harvest for eight weeks. So that by the time, we and everybody else in the industry, got into actually harvest. What actually came off the trees were three sizes instead of seven sides or eight sizes and it was all big fruit and 50% of that fruit, which was in storage became unsellable fresh and we were forced to send it to the juice plant, that's when we utilization dropped to 50%, just during that time period.

For the full-year, our fresh utilization was 63% driven by that weighted average of the inputs that. This coming year, we anticipate our models are calling for a fresh utilization of 75% and at this time, I think that's achievable.

Eric Larson -- Buckingham Research Group -- Analyst

Okay. Yeah, that makes sense. I just wasn't sure -- yeah, that 63% was really the figure that I was sort of looking for. And then, you've talked about the -- you've talked what avocados and what that might be. Could there be upside to that? I mean, obviously, what's very unusual about last year is that, you've got hit by all three of your major ag products; lemons, avocados and oranges. And it seems like you should have a fairly good runway looking forward into this upcoming year that, at least if some, if not all of them, maybe two or three, if not all three of those factors churn for you. Is that a fair way to kind of characterize your $22 million to $26 million adjusted EBITDA guidance?

Harold Edwards -- President and Chief Executive Officer

Yes, Eric, that's exactly right. We've never seen all three of the crops fail at the same time and that's kind of what we experienced in 2019. For directional guidance in avocados, we believe there is a 4 million to 6 million pound crop hanging on the trees. And the pricing -- you follow the avocado space, so pricing is uncertain, so our models were built with $1 a pound and at this point markets are stronger than that, but there is an awfully large crop, as you know, in Mexico and also in Peru that will find its way into these markets that, my guess is will put downward pressure on the pricing. So we'll just have to see.

We're often running with oranges right now and we're getting normal export movement, whereas last year we got no export movement. Pricing has been somewhat of a challenge, but we believe we're still on track to hit our orange numbers and then so far through this operating year, through this limited amount of time, we're on track with utilization and movement of our lemons as well. So we feel like we're off to a good start, but we're cautiously optimistic as we go forward.

Eric Larson -- Buckingham Research Group -- Analyst

Okay. Great, thanks. I'll follow up with you guys a little bit later.

Mark Palamountain -- Chief Financial Officer

Thanks, Eric.

Harold Edwards -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We'll now take our next question from Ben Klieve with National Securities.

Ben Klieve -- National Securities Corporation -- Analyst

All right. Thanks for taking my questions. Just a couple of big picture ones for me here. First, with regards to the weather and you kind of alluded to this year with prior caller but with regards to the rain, I'm wondering if you can kind of classify where the field stands today relative to where they were last year. It's been a wet winner out in California, but it sounds like from your perspective, it's a different wet and that the wet weather this year is good and not going to inhibit your Harvest at this point that you can tell. Can you kind of update us on kind of how the weather has been thus far this year and compare it to where you stand last year?

Harold Edwards -- President and Chief Executive Officer

Yeah, definitely. The rainfall last year, which came in at pretty close to 30 inches. In a normal year for us in Ventura County would be somewhere directionally around 17 inches, so almost 2x times of a normal rainfall. It was a godsend from a perspective of sort of putting an end to a seven-year prolonged drought. It helped replenish our aquifers. It was just a great thing all around except just the timing of the rain events kept us all in the industry from getting into harvest fruit for eight weeks. This year, we're off to a great start with rainfall as well. I think we're somewhere around eight inches of rain, something like that so far. The intervals between rain events and then drive periods have been just about perfect and ideal so far. So, absolutely no negative impact on harvests. No negative impact on fruit quality so far this year. And it's really setting itself up to be more of what we would consider a more of a normal situation in a normal year.

Now, that said, we really have to keep our eye on weather events all the way through the end of March. And that would really be where the big impacts could continue to be, so. But as we look forward with the limited amount of visibility we have today, things are looking pretty good.

Ben Klieve -- National Securities Corporation -- Analyst

Okay, perfect. Good to hear. It's always good when Mother Nature cooperates. One other question for you regards to the Harvest at Limoneira. I understand that the kind of sizable cash flows aren't necessarily expected to come during '20 -- your fiscal 2020. But I'm wondering if you can kind of provide us what kind of some milestones that you're looking out that over the next 12 months. And when do you think you may have visibility of really that cash flow really being tangible? That's something you think we're going to hear more about over the next 12 months or you think it's going to be potentially be beyond that?

Harold Edwards -- President and Chief Executive Officer

Yeah, Ben. So I think from the cash flow perspective there Harvest, we'll have a better idea toward the end of this year '20. Originally in our models, which we started about three years ago before we started building it was going to be in '21. But I think as sales are progressing through taking a more conservative approach to that and will be in '22 will be that first lumpy cash flow opportunity to the tune of $20 million is roughly sort of how that looks. Over -- between now and then, I think it's just -- we're just going to have to see how the sales are going. Sales right now are -- we're doing anywhere between one to two homes a week. So it's relatively close to plan. This all is the slower season, typically. And so, we do expect our next phase, we're out for bid right now on our next set of lots. And so, I would say, it's moving according to plan.

Just a comment from the equity earnings perspective, I think, as we talk about lumpy cash, earnings should be relatively stable year-over-year if we're selling the amount of lots per plant to get to that 1,500 units. And so, as similar to last year where we had approximately $3 million of equity earnings, we expect to have that timing on a quarter-to-quarter basis and how that goes because most of it gears toward the end half of the calendar year. So we'll just have to see, but generally that's how that should flow.

Ben Klieve -- National Securities Corporation -- Analyst

All right. Very good. That's helpful. I appreciate you taking the time. I'll get back in queue.

Harold Edwards -- President and Chief Executive Officer

Thanks, Ben.

Operator

Thank you. And that does conclude the question-and-answer session. I would now like to hand the conference back over to Mr. Edwards for any additional or closing remarks.

Harold Edwards -- President and Chief Executive Officer

Thank you for your questions and interest in Limoneira. As a reminder, we are presenting at the ICR Conference tomorrow and look forward to seeing many of you there. Thank you, again, and have a great day.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

John Mills -- Investor Relations

Harold Edwards -- President and Chief Executive Officer

Mark Palamountain -- Chief Financial Officer

Ben Bienvenu -- Stephens, Inc. -- Analyst

Vincent Anderson -- Stifel, Nicolaus & Company -- Analyst

Eric Larson -- Buckingham Research Group -- Analyst

Ben Klieve -- National Securities Corporation -- Analyst

More LMNR analysis

All earnings call transcripts

AlphaStreet Logo