Limoneira Posts 25% Revenue Drop in Q3

Key Points

• Limoneira (NASDAQ:LMNR) reported a sharp year-over-year revenue decline, with sales dropping 25% for the third quarter of fiscal year 2025.

• Adjusted diluted earnings per share fell from $0.42 to ($0.02), reflecting a significant downturn in profitability.

• Management reiterated full-year volume guidance for lemons and avocados despite the challenging quarterly results.

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Limoneira (NASDAQ:LMNR), a major grower of lemons and avocados and a real estate developer, released its third-quarter fiscal 2025 earnings on September 9, 2025. The company reported a drop in revenue, a decline in earnings, and lower cash levels compared to the prior year. These results reflect ongoing pressure in its core agribusiness and highlight increasing reliance on real estate to support liquidity. Management restated its confidence in long-term strategies, including a pending partnership with Sunkist and development projects, but overall, the quarter showed clear operating and financial challenges.

Limoneira's Business and Priorities

Limoneira runs two major businesses: growing and marketing fresh fruit, and developing real estate on its extensive land holdings. Its primary crops are lemons and avocados, while other crops include oranges and wine grapes. The company's agricultural lands cover thousands of acres, mainly in California and Arizona, with some international expansion into Chile and Argentina.

The business has shifted focus in recent years. Management is working to improve margins in fruit sales, expand avocado production, and unlock value from real estate ventures. Strategic priorities include effective water management, diversifying agricultural output, and selling or developing land to generate cash. The company's future success depends on stabilizing farm profitability, growing avocado acreage, and executing on major real estate projects such as the Harvest at Limoneira community.

Quarter Review: Notable Trends and Developments

The quarter marked a steep downturn in Limoneira's core operations. The revenue decline was driven by falling lemon and avocado sales, with agribusiness revenue down 25.7%. Profitability metrics also worsened. Adjusted earnings per share fell sharply into negative territory, and adjusted EBITDA, a measure of cash flow from operations, dropped by more than 75% year-over-year. These declines far exceeded typical seasonal changes, showing broad weakness across key product lines.

Lemon sales, Limoneira’s main business, experienced both volume and pricing pressures. Fresh packed lemon revenue fell 7.8%, while brokered and processed lemon sales dropped even more sharply. The price per lemon carton decreased about 8% compared to the same period last year, as the company faced significant market headwinds. Leadership explained that lemons were held in storage to target more favorable prices later in the quarter, but this approach did not prevent margin loss. The company stated, “the lemon market continued to face pricing pressure during the first two months of the third quarter and our fresh utilization was lower due to holding lemons in storage longer to capture higher prices during the final month of the quarter.” according to Harold Edwards.

Avocado revenue, which comes from sales of the fresh fruit, plunged almost 39% compared to a year ago. This was mainly due to lower harvest volume, as Limoneira produced approximately 5.65 million pounds compared to 8.86 million pounds in the prior year. This reduction was consistent with the company’s warning about avocado tree cycles, known as “alternate bearing” years, where trees naturally yield less fruit every other season. Although pricing per pound was relatively stable, avocado income was still well below previous periods. The company expects to reach its full-year FY2025 guidance for both lemons and avocados, despite the tough quarter.

Other business segments also showed stress. Farm management revenue collapsed due to the loss of a major contract. Orange revenues grew by $500,000, with a doubling in volume, though segment size remains small relative to total revenue. Meanwhile, Limoneira’s real estate projects continued to support the balance sheet. The company received $10.0 million in cash distributions from its joint venture, Harvest at Limoneira, in April 2025 and $1.7 million from a water rights sale in January 2025. These proceeds provided much-needed liquidity as cash used in operations rose and net debt increased sharply.

The company is moving forward with merger plans for its citrus sales and marketing operations with Sunkist Growers. This strategic move is expected to deliver $5 million in annual overhead savings and adjusted EBITDA benefit starting in FY2026, mainly by transferring sales and marketing functions to Sunkist. Limoneira expects this partnership to streamline logistics, reduce costs, and improve profit margins on each carton of fruit sold starting in FY2026. However, the earnings benefit is expected to materialize next fiscal year, not in the current results.

Looking Ahead: Guidance and Key Metrics to Track

Limoneira reaffirmed its full-year volume targets, expecting to deliver between 4.5 and 5.0 million cartons of fresh lemons and about 7.0 million pounds of avocados. Leadership also highlighted the anticipated benefits starting in FY2026 from the Sunkist partnership and continued real estate project cash flows, especially from the Harvest at Limoneira joint venture, which targets $180 million in total distributions by FY2030.

With profitability under pressure and cash use up, investors should monitor several factors in coming quarters. These include actual cost savings and cash inflows from planned strategic partnerships and real estate asset sales, as well as price trends in core citrus and avocado markets. Rising debt levels have tightened financial flexibility, making successful farm operations and timely real estate monetization critical, especially given substantial cash outflows this year.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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