Calavo Growers ( NASDAQ: CVGW ) shares plunged 14% on Friday in response to the firm's fiscal third quarter earnings that fell short of analysts estimates.
Late Thursday, the avocado producer reported adj. EPS of $0.16 for the quarter that missed estimates. Total revenue grew 20% to $342M, with Grown segment generating $207.6M (+28% Y/Y) and Prepared segment $134.9M (+9% Y/Y).
The company said a sharp increase in fruit input costs for its guacamole product line pressured earnings in its Prepared segment, while avocado supply challenges and price volatility in Mexico weighed on its Grown segment results.
Avocado prices were 63% higher year-over-year and volume 19% lower due to the supply constraints in Mexico and actions taken to maintain margins.
Conditions in the Grown segment started to recover in August and margins are now tracking toward the historical range of $3-$4 per carton, Calavo Growers ( CVGW ) noted, but volume is likely to remain challenged in the near term.
Selling, general and administrative expenses grew from $12.4M in the year-ago period to $16.7M due to a $1.7M impact from certain costs being recategorized as cost of goods sold in the prior year, an increase in incentive compensation expenses and the impact of non-recurring consulting services and recruiting fees related to restructuring efforts.
Looking ahead, Calavo Growers ( CVGW ) said that it has seen the volatility that negatively affected results in 3Q subside in August, and expects more normal conditions to persist over the balance of the quarter.
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Calavo Growers slides as avocado price volatility hurts Q3 results