Calavo Growers Completes Sale of Fresh Cut Business

Rhea-AI Summary

Calavo Growers, Inc. (Nasdaq-GS: CVGW) has completed the sale of its Fresh Cut business and related real estate to F&S Fresh Foods for $83 million, subject to closing adjustments. The transaction, finalized on August 15, 2024, allows Calavo to focus on its core avocado and guacamole businesses. Lee Cole, President and CEO of Calavo, expressed gratitude to the Fresh Cut team and confidence in F&S Fresh Foods as the new owner. The company plans to share its third quarter results on September 9, 2024. This strategic move marks a significant shift in Calavo's business operations, potentially impacting its financial structure and future growth strategies.

Positive

• Sale of Fresh Cut business for $83 million, providing significant cash influx
• Strategic focus on core avocado and guacamole businesses
• Potential for improved operational efficiency by streamlining business segments

Negative

• Reduction in business diversification by divesting Fresh Cut segment
• Potential loss of revenue stream from Fresh Cut business

Insights

Financial Analyst

The sale of Calavo Growers' Fresh Cut business for $83 million is a strategic move that could significantly impact the company's financial position and operational focus. This divestiture allows Calavo to streamline operations and concentrate on its core avocado and guacamole segments, potentially improving profit margins and operational efficiency. The transaction's impact on Calavo's balance sheet and cash flow will be important to monitor in the upcoming Q3 earnings report. Investors should pay close attention to how management plans to utilize the proceeds, whether for debt reduction, investments in core business expansion, or returning value to shareholders. This move could signal a shift in Calavo's long-term strategy, potentially affecting its market positioning and growth trajectory in the competitive fresh produce industry.

Market Research Analyst

Calavo's decision to divest its Fresh Cut business aligns with current market trends favoring focused business models. The fresh-cut produce sector faces challenges such as high operational costs and thin margins, making it a less attractive segment for some players. By concentrating on avocados and guacamole, Calavo is positioning itself in a high-growth market with better profit potential. The global avocado market is projected to grow at a CAGR of 5.3% from 2021 to 2026, driven by increasing health consciousness and demand for plant-based foods. This strategic move could enhance Calavo's competitive advantage in its core markets, potentially leading to improved market share and investor sentiment. However, the company will need to navigate the loss of revenue diversification, which may increase its exposure to avocado market volatility.

SANTA PAULA, Calif., Aug. 16, 2024 (GLOBE NEWSWIRE) -- Calavo Growers, Inc. (Nasdaq-GS: CVGW), a global leader in the avocado industry, today announced that it completed the sale of its Fresh Cut business (formerly “RFG”) and related real estate to F&S Fresh Foods of Vineland, New Jersey, on August 15 for $83 million, subject to various closing adjustments.

“We are pleased to announce that the sale of our Fresh Cut business has been finalized, which will allow us to focus on our core avocado and guacamole businesses,” said Lee Cole, President and Chief Executive Officer of Calavo Growers, Inc. “We would like to thank the team members of the Fresh Cut business for their hard work and years of service to Calavo, and we wish them the best as they transition to F&S. We also would like to thank the team at F&S for partnering with us on this transaction. The Fresh Cut business will be in the very capable hands of F&S, a leader in the industry and one of our long-trusted co-packing partners.

“We look forward to sharing our third quarter results with investors when we announce earnings on September 9, 2024.”

About Calavo Growers, Inc.
Calavo Growers, Inc. (Nasdaq-GS: CVGW) is a global leader in high quality produce, including avocados, tomatoes and papayas. Calavo products are sold under the trusted Calavo brand name, proprietary sub-brands, private label and store brands. Founded in 1924, Calavo has a rich culture of innovation, sustainable practices and market growth. The Company serves retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers worldwide. Calavo is headquartered in Santa Paula, California, with processing plants and packing facilities throughout the U.S. and Mexico. Learn more about The Family of Fresh™ at calavo.com.

Safe Harbor Statement
This press release contains statements relating to future events and results of Calavo that are “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, that involve risks, uncertainties, and assumptions. These statements are based on our current expectations and are not promises or guarantees. If any of the risks or uncertainties materialize or the assumptions prove incorrect, the results of Calavo may differ materially from those expressed or implied by such forward-looking statements and assumptions.

For a discussion of these risks and uncertainties and other risks and uncertainties that we face, please see the risk factors described in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent updates that may be contained in our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Forward-looking statements contained in this press release are made only as of the date of this press release, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Contact

Julie Kegley, SVP

Financial Profiles, Inc.

calavo@finprofiles.com

310-622-8246

FAQ

What is the value of Calavo Growers' Fresh Cut business sale to F&S Fresh Foods?

Calavo Growers (CVGW) sold its Fresh Cut business and related real estate to F&S Fresh Foods for $83 million, subject to various closing adjustments.

When did Calavo Growers complete the sale of its Fresh Cut business?

Calavo Growers (CVGW) completed the sale of its Fresh Cut business on August 15, 2024.

What will Calavo Growers focus on after selling its Fresh Cut business?

After selling its Fresh Cut business, Calavo Growers (CVGW) will focus on its core avocado and guacamole businesses.

When will Calavo Growers announce its third quarter results for 2024?

Calavo Growers (CVGW) plans to announce its third quarter results on September 9, 2024.