Avocado Seller Calavo’s Net Income Drops 11%

A big avocado harvest helped boost fiscal second-quarter revenue and operating earnings for Santa Paula, Calif.-based Calavo Growers Inc., the nation’s largest avocado marketer. But net income fell 11% from the year-earlier quarter, which included a $1-million gain.

Calavo Chief Executive Lee E. Cole called the quarter a “solidly profitable” one that “reflects focused execution of Calavo’s strategic business agenda.”

In addition to the large harvest, results benefited from a new processing plant in Mexico and growing demand for Calavo’s guacamole that is treated under high pressure, which gives the product a shelf life of at least 50 days, Cole said.

Calavo reported net income of $2.2 million, or 15 cents a share, for the quarter ended April 30. In the same quarter last year, Calavo earned $1.5 million, or 10 cents a share, excluding the gain from selling its former Santa Ana headquarters. Including the gain, earnings were 18 cents.

Sales for the latest quarter rose 12% to $67.4 million and operating income jumped 76% to $3.6 million.

Cole said that California’s plentiful harvest had more than doubled Calavo’s packing volume. Calavo processed nearly 70 million pounds of fresh avocados in the quarter, Cole said, compared with 33 million pounds during the same period last year.

The company’s processing plant in Uruapan, in Mexico’s Michoacan state, opened in 2005 and “is now running on all cylinders and really turning out well as far as the costs are concerned,” he said.

In May, Calavo began selling California avocados in Mexico, Cole said, and is currently shipping six loads a week, about 40,000 pounds, of avocados south of the border. Cole said that he hoped the new business would help improve earnings later in the year.

“This market just opened up,” Cole said. “There is a big demand in Mexico and we anticipate serving it.”

Calavo shares rose 29 cents, or 3%, to $10.95.