Shares of Calavo Growers (CVGW -1.39%) were going rotten today after the avocado grower posted a decline in revenue and earnings in its fourth quarter.
As a result, the stock was down 7.7% as of 12:54 p.m. ET.
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Calavo shrivels
Calavo, one of the world's largest producers of avocados, said revenue in the quarter fell 1% to $241.2 million, which missed the consensus at $252.4 million.
In its grown segment, which is mostly avocados but also includes other produce like tomatoes, revenue rose 5.6% to $125.7 million. Avocado volume was down 8.7% as it focused on pricing, which helped drive gross profit up from $8.5 million to $8.7 million.
Its prepared segment struggled. Revenue was down 7.9% to $116.1 million, and gross profit in the segment fell from $11.8 million to $6.7 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell from $9.6 million to $7 million. However, it reported a loss per share of $0.33, which compared to a per-share profit of $0.03.
CEO Lee Cole said, "Avocado margins softened compared to the third quarter due to seasonality and an unfavorable foreign exchange impact of $3.0 million; however, margins improved versus the prior year quarter due to our margin management discipline."
What's next for Calavo
The company didn't offer guidance in the quarter, but the commentary from Cole should encourage investors. Cole, who was Calavo's longtime CEO and returned to the post last year, has driven a general recovery in the stock.
Calavo is also in the process of selling its fresh-cut business to F&S Fresh Foods, which should help it focus on the core grown segment.
While the quarterly results were disappointing, the recovery story still seems intact, especially with the avocado gross margin moving in the right direction.
