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CALAVO GROWERS INC

CVGW
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Business Summary

Calavo Growers, Inc. is a global leader in the sourcing, packing and distribution of fresh avocados, tomatoes, and papayas and the processing of guacamole and other avocado products. The company operates in the highly competitive perishable food industry, which is intensified by the perishable nature of products and evolving consumer preferences. Calavo competes on price, product quality, brand recognition, customer loyalty, consistency, supply reliability, marketing effectiveness, and the ability to provide value-added services such as ripening, packaging, regional distribution and logistics. The avocado market is impacted by an increasing volume of foreign grown avocados being imported into the United States, with significant plantings in Mexico, Chile, the Dominican Republic, Peru, Colombia and other parts of the world, which have had and will continue to have the effect of increasing the volume of foreign grown avocados entering the United States market.

Based on data from various industry sources, Calavo believes it is consistently among the largest avocado marketers in the United States in terms of both volume and sales. The company attributes its leadership position to competitive sourcing strategies, strong communication and service with growers, diversified fresh product offerings, consistent product quality, and value-added programs. Primary competitors include large multinational producers and distributors as well as regional and local growers and importers in the avocado business, and local and international food processors in the prepared avocado products segment. The company's top ten customers accounted for approximately 51% of consolidated net sales in fiscal 2025, with its largest customer representing approximately 14% of net sales.

Calavo generates revenue through two reportable segments: Fresh and Prepared. The Fresh segment consists of fresh avocados, tomatoes and papayas, where revenue is generated by grading, sizing, packing, cooling, and ripening avocados for delivery, with tomatoes primarily handled on a consignment basis and papayas through a pooling system. The Prepared segment consists of guacamole sold at retail and foodservice as well as avocado pulp sold to foodservice, produced using ultra-high-pressure technology. The company also utilizes third-party co-packers to supplement production as needed. Revenue is recognized when control of products is transferred to customers, with the company acting as principal in its revenue arrangements.

The Fresh segment generated net sales of $576.544 million in fiscal 2025, consisting of avocado sales of $530.707 million , tomato sales of $35.492 million , papaya sales of $12.470 million , and other fresh income of $0.096 million . Avocado volume decreased 8% for the year ended October 31, 2025 compared to the prior year period, while the average avocado sales price per carton increased 9% . Tomato sales decreased by $18.6 million , or 35% , driven by a 30% decrease in tomato volume sold and a 7% decrease in the average sales price per carton. Fresh segment gross profit was $46.309 million , or 8% of net sales.

The Prepared segment generated net sales of $71.890 million in fiscal 2025, consisting of guacamole gross sales of $77.130 million less sales allowances of $5.240 million . The increase in Prepared net sales of approximately $8.0 million , or 12% , was driven primarily by an 11% increase in pounds sold, partially offset by a 1.5% increase in average selling price per pound. Prepared segment gross profit was $17.354 million , or 24% of net sales, reflecting improved operational efficiency and stronger cost management.

On January 14, 2026, Calavo entered into an Agreement and Plan of Merger with Mission Produce, Inc., pursuant to which each share of Calavo common stock will be converted into the right to receive $27.00 per share in consideration, consisting of 0.9790 shares of Mission common stock and $14.85 in cash. In March 2025, the Board authorized a stock repurchase program of up to $25 million , though no shares have been repurchased to date. During fiscal 2025, the company paid quarterly dividends of $0.20 per share each, for aggregate dividends of $14.297 million . In July 2025, the FDA placed Calavo's wholly-owned subsidiary CDM on a temporary Red List Detention Hold, which resulted in approximately $5.1 million of incremental costs; the hold was fully lifted in September 2025.

For fiscal year 2025, total net sales were $648.434 million , a decrease of $13.1 million or approximately 2% compared to fiscal 2024. Gross profit was $63.663 million , a decrease of $4.1 million or 6% compared to the prior year. Operating income was $19.611 million , compared to $16.723 million in fiscal 2024. Net income from continuing operations was $19.970 million , compared to $6.848 million in fiscal 2024. Net income attributable to Calavo Growers, Inc. was $19.796 million , or $1.11 per diluted share, compared to a net loss of $1.076 million , or $(0.06) per diluted share in fiscal 2024.

Business Outlook

Calavo expects avocado sales volume to increase in fiscal 2026, driven by new customer recruitment, growth from existing customers, and expanded global sourcing. The company believes favorable consumption trends for its products persist, supported by broader consumer shifts toward health and wellness, noting that per-capita avocado consumption in the United States was approximately nine pounds in 2023–2024 and is estimated to have remained at a similar level in 2024–2025, representing an increase of roughly 64% over the past decade. The company also believes demographic changes in the U.S., particularly the growth of the Hispanic or Latino population which represented approximately 19.8% of the U.S. population in fiscal year 2025, will continue to support growth in avocado and avocado-based product consumption.

The Prepared segment is actively working to strengthen relationships with major foodservice companies, expand partnerships with retail and industrial clients, and develop strategic alliances to broaden market reach and increase product visibility. The company's avocado squeeze pouch product contributed modestly to the increase in net sales for fiscal 2025, supported by its extended shelf life and portion control format. Calavo also believes that avocados and avocado-based products will further penetrate other markets that it currently operates in as interest in avocados continues to expand.

Prepared segment gross profit increased 38% to $17.4 million in fiscal 2025, reflecting improved operational efficiency and stronger cost management, with lower fruit input costs and continued operating efficiencies across the segment. The gross profit percentage for guacamole products was 24% in fiscal 2025 compared to 20% in fiscal 2024. Selling, general and administrative expenses decreased by $8.0 million , or 16% , driven by an $8.0 million reduction in professional and consulting fees, a $1.6 million reduction in compensation expenses, and a $1.0 million decrease in stock-based compensation, partially offset by $2.3 million of write-offs related to bad debt associated with advances to suppliers.

The company is actively implementing a multi-year cybersecurity enhancement program to address identified improvement opportunities in incident response capabilities, business continuity and disaster recovery planning, infrastructure modernization, and security monitoring. Calavo is implementing enhanced business continuity and disaster recovery capabilities, including multi-region architecture for critical cloud-hosted systems, to reduce recovery time objectives and improve organizational resilience. The company's information technology organization includes personnel with experience in systems engineering, infrastructure management, network operations, and incident response.

Capital expenditures for fiscal 2025 were $2.151 million for purchases of property, plant, and equipment. The Board authorized a stock repurchase program of up to $25 million in March 2025, though no shares have been repurchased to date. The company paid quarterly dividends of $0.20 per share during fiscal 2025, and on December 31, 2025, the Board declared a cash dividend of $0.20 per share, or an aggregate of $3.6 million , to be paid on January 30, 2026. The company currently expects that it will continue to pay comparable cash dividends in the future.

The company faces several headwinds including the termination of the 2019 Tomato Suspension Agreement on July 14, 2025, which resulted in the imposition of an approximate 17% anti-dumping duty on most fresh tomatoes imported from Mexico, contributing to continued softness in tomato pricing and demand. The FDA detention hold on certain avocado imports from Mexico in July and August 2025 resulted in approximately $5.1 million of incremental costs. The company also faces ongoing uncertainty related to its dispute with Mexican tax authorities regarding the 2013 Tax Assessment totaling $3.5 billion Mexican pesos ($187.0 million USD) as of October 31, 2025, and IVA receivables totaling $55.8 million (1.0 billion Mexican pesos) as of October 31, 2025.

The company's ability to complete the proposed Mergers with Mission Produce is subject to various conditions including approval by Calavo's shareholders and Mission's shareholders, expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary closing conditions. If the Mergers are not completed, Calavo may be required to pay Mission a termination fee of $12.87 million or $15.02 million , depending on whether the applicable fee is calculated at 3.0% or 3.5% of transaction enterprise value. The Merger Agreement places certain restrictions on the operation of Calavo's business prior to closing, which may prevent the company from taking certain actions or pursuing business opportunities.

Risk Factors

The company faces material risks from its ongoing dispute with Mexican tax authorities, including a 2013 Tax Assessment totaling $3.5 billion Mexican pesos ($187.0 million USD) as of October 31, 2025, for which a provision of $11.0 million has been recorded, and IVA receivables of $55.8 million (1.0 billion Mexican pesos) whose collection is subject to significant uncertainty. Customer concentration risk is material, with the top ten customers accounting for approximately 51% of consolidated net sales in fiscal 2025 and the largest customer representing approximately 14% . The company's ability to complete the proposed Mergers with Mission Produce is subject to various conditions, and failure to consummate could require payment of a termination fee of $12.87 million or $15.02 million . The termination of the 2019 Tomato Suspension Agreement resulted in an approximate 17% anti-dumping duty on most fresh tomatoes imported from Mexico, creating pricing and volume volatility. The company's single manufacturing plant for guacamole products in Michoacán, Mexico represents a concentration risk, as any significant production disruptions could limit availability of guacamole products.

Management Priorities

Management's message emphasizes the company's position as a leading marketer, processor, and distributor of avocados and other value-added fresh foods, serving customers worldwide. Key themes include the successful navigation of the first full year following the divestiture of the Fresh Cut Business, which was completed in August 2024, and the focus on the remaining Fresh and Prepared segments. Management highlights the company's diversified sourcing network including supply from California, Mexico, Peru, and Colombia supporting year-round availability, and the belief that favorable consumption trends for avocado products persist supported by broader consumer shifts toward health and wellness. The company is focused on expanding grower partnerships and strengthening relationships with retail and foodservice customers to support long-term net sales growth across both segments. Management also notes the entry into the Merger Agreement with Mission Produce on January 14, 2026, with each share of Calavo common stock to be converted into the right to receive $27.00 per share in consideration consisting of 0.9790 Mission Shares and $14.85 in cash.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Competition; Item 7, MD&A — Results of Operations
  2. [2] Item 1, Business — Competition; Item 7, MD&A — Results of Operations
  3. [3] Item 7, MD&A — Results of Operations; Item 8, Note 10 — Segment Information
  4. [4] Item 7, MD&A — Results of Operations
  5. [5] Item 7, MD&A — Results of Operations
  6. [6] Item 7, MD&A — Results of Operations
  7. [7] Item 7, MD&A — Results of Operations
  8. [8] Item 7, MD&A — Results of Operations
  9. [9] Item 7, MD&A — Results of Operations
  10. [10] Item 7, MD&A — Results of Operations
  11. [11] Item 7, MD&A — Results of Operations
  12. [12] Item 7, MD&A — Results of Operations
  13. [13] Item 7, MD&A — Results of Operations
  14. [14] Item 7, MD&A — Results of Operations
  15. [15] Item 7, MD&A — Results of Operations
  16. [16] Item 7, MD&A — Results of Operations; Item 8, Note 10 — Segment Information
  17. [17] Item 7, MD&A — Results of Operations
  18. [18] Item 7, MD&A — Results of Operations
  19. [19] Item 7, MD&A — Results of Operations
  20. [20] Item 7, MD&A — Results of Operations
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  22. [22] Item 7, MD&A — Results of Operations
  23. [23] Item 7, MD&A — Results of Operations
  24. [24] Item 7, MD&A — Results of Operations
  25. [25] Item 1, Business — Agreement and Plan of Merger; Item 7, MD&A — Recent Developments
  26. [26] Item 1, Business — Agreement and Plan of Merger; Item 7, MD&A — Recent Developments
  27. [27] Item 1, Business — Agreement and Plan of Merger; Item 7, MD&A — Recent Developments
  28. [28] Item 5, Market for Registrant's Common Equity; Item 7, MD&A — Liquidity and Capital Resources
  29. [29] Item 5, Market for Registrant's Common Equity — Dividend Policy
  30. [30] Item 8, Consolidated Statements of Shareholders' Equity
  31. [31] Item 7, MD&A — Recent Developments
  32. [32] Item 8, Consolidated Statements of Operations
  33. [33] Item 7, MD&A — Results of Operations
  34. [34] Item 7, MD&A — Results of Operations
  35. [35] Item 8, Consolidated Statements of Operations
  36. [36] Item 7, MD&A — Results of Operations
  37. [37] Item 7, MD&A — Results of Operations
  38. [38] Item 8, Consolidated Statements of Operations
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  58. [58] Item 8, Consolidated Statements of Cash Flows
  59. [59] Item 5, Market for Registrant's Common Equity; Item 7, MD&A — Liquidity and Capital Resources
  60. [60] Item 5, Market for Registrant's Common Equity — Dividend Policy
  61. [61] Item 5, Market for Registrant's Common Equity — Dividend Policy
  62. [62] Item 5, Market for Registrant's Common Equity — Dividend Policy
  63. [63] Item 7, MD&A — Results of Operations
  64. [64] Item 7, MD&A — Recent Developments
  65. [65] Item 1A, Risk Factors; Item 8, Note 7 — Commitments and Contingencies
  66. [66] Item 1A, Risk Factors; Item 8, Note 14 — Mexican IVA Taxes Receivable
  67. [67] Item 1A, Risk Factors — Risks Related to the Proposed Mergers
  68. [68] Item 1A, Risk Factors — Risks Related to the Proposed Mergers
  69. [69] Item 1A, Risk Factors — Risks Related to the Proposed Mergers
  70. [70] Item 1A, Risk Factors — Risks Related to the Proposed Mergers
  71. [71] Item 1A, Risk Factors; Item 8, Note 7 — Commitments and Contingencies
  72. [72] Item 1A, Risk Factors; Item 8, Note 7 — Commitments and Contingencies
  73. [73] Item 1A, Risk Factors; Item 8, Note 14 — Mexican IVA Taxes Receivable
  74. [74] Item 1, Business — Competition; Item 7, MD&A — Results of Operations
  75. [75] Item 1, Business — Competition; Item 7, MD&A — Results of Operations
  76. [76] Item 1A, Risk Factors — Risks Related to the Proposed Mergers
  77. [77] Item 1A, Risk Factors — Risks Related to the Proposed Mergers
  78. [78] Item 7, MD&A — Results of Operations
  79. [79] Item 1, Business — Agreement and Plan of Merger; Item 7, MD&A — Recent Developments
  80. [80] Item 1, Business — Agreement and Plan of Merger; Item 7, MD&A — Recent Developments
  81. [81] Item 1, Business — Agreement and Plan of Merger; Item 7, MD&A — Recent Developments
  82. [82] Item 8, Consolidated Statements of Operations
  83. [83] Item 8, Consolidated Statements of Operations
  84. [84] Item 8, Consolidated Statements of Operations
  85. [85] Item 8, Consolidated Statements of Operations
  86. [86] Item 8, Consolidated Statements of Operations
  87. [87] Item 8, Consolidated Statements of Operations
  88. [88] Item 8, Consolidated Statements of Operations
  89. [89] Item 8, Consolidated Statements of Operations
  90. [90] Item 8, Consolidated Statements of Operations
  91. [91] Item 8, Consolidated Statements of Operations
  92. [92] Item 7, MD&A — Results of Operations
  93. [93] Item 8, Consolidated Balance Sheets
  94. [94] Item 8, Consolidated Balance Sheets
  95. [95] Item 8, Note 6 — Revolving Credit Facilities
  96. [96] Item 7, MD&A — Results of Operations
  97. [97] Item 7, MD&A — Results of Operations
  98. [98] Item 7, MD&A — Results of Operations
  99. [99] Item 7, MD&A — Results of Operations
  100. [100] Item 7, MD&A — Results of Operations
  101. [101] Item 7, MD&A — Results of Operations
  102. [102] Item 8, Consolidated Statements of Operations
  103. [103] Item 7, MD&A — Results of Operations
  104. [104] Item 8, Consolidated Statements of Operations
  105. [105] Item 7, MD&A — Results of Operations

Analysis on 6/22/2026