Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of the results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those presented under “Risk Factors” included in Item 1A and elsewhere in this Annual Report on Form 10-K. This section generally discusses the results of operations for fiscal year 2025 compared to fiscal year 2024. For discussion related to the results of operations and changes in financial condition for fiscal year 2024 compared to fiscal year 2023 refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 2024 Form 10-K, which was filed with the United States Securities and Exchange Commission (SEC) on December 23, 2024.
Overview
Limoneira Company, a Delaware corporation, is the successor to several businesses with operations in California since 1893. We are primarily an agribusiness company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 10,500 acres of land, water resources and other assets to maximize long-term stockholder value. Our operations consist of fruit production, sales and marketing, rental operations, real estate and capital investment activities.
We have three business divisions: agribusiness, rental operations and real estate development. The agribusiness division is comprised of four reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness, which primarily includes oranges, specialty citrus, wine grapes and farm management services. The agribusiness division includes our core operations of farming, harvesting, lemon packing and lemon sales operations. The rental operations division includes our residential and commercial rentals, leased land operations and organic recycling. The real estate development division includes our investments in real estate development projects.
Recent Developments – Refer to Part I, Item 1 “Fiscal Year 2025 Highlights and Recent Developments”
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Results of Operations
The following table shows the results of operations (in thousands):
Years Ended October 31,
Net revenues:
Costs and expenses:
Impairment of intangible asset — — % 643 1 % — — %
Gain on sales of water rights (1,488) (1) % — — % — — %
Gain on legal settlement — — % — — % (2,269) (1) %
Operating (loss) income:
Impairment of intangible asset — (643) —
Gain on sales of water rights 1,488 — —
Gain on remeasurement of previously held equity method investment 2,852 — —
Gain on legal settlement — — 2,269
Other (expense) income:
Interest expense, net of patronage dividends (1,553) (961) (494)
Net loss attributable to noncontrolling interests, net 375 542 283
Net (loss) income attributable to Limoneira Company $ (15,981) $ 7,716 $ 9,400
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Non-GAAP Financial Measures
Due to significant depreciable assets associated with the nature of our operations and interest costs associated with our capital structure, management believes that earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, which excludes stock-based compensation, pension settlement cost, impairment of intangible asset, loss (gain) on disposal of assets, net, cash bonus related to sale of assets, gain on legal settlement, cash severance benefits, contract termination fee and gain on remeasurement of previously held equity method investment are important measures to evaluate our results of operations between periods on a more comparable basis. Such measurements are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and should not be construed as an alternative to reported results determined in accordance with GAAP. The non-GAAP information provided is unique to us and may not be consistent with methodologies used by other companies.
EBITDA and adjusted EBITDA are summarized and reconciled to net (loss) income attributable to Limoneira Company which management considers to be the most directly comparable financial measure calculated and presented in accordance with GAAP, as follows (in thousands):
Fiscal Year EndedOctober 31,
Net (loss) income attributable to Limoneira Company $ (15,981) $ 7,716 $ 9,400
Interest expense, net of patronage dividends 1,553 961 494
Pension settlement cost — — 2,700
Impairment of intangible asset — 643 —
Loss (gain) on disposal of assets, net 706 (507) (28,849)
Cash bonus related to sale of assets — — 2,000
Gain on legal settlement — — (2,269)
Contract termination fee 2,100 — —
Gain on remeasurement of previously held equity method investment (2,852) — —
Fiscal Year 2025 Compared to Fiscal Year 2024
Revenues
Total net revenues for fiscal year 2025 were $159.7 million, compared to $191.5 million for fiscal year 2024. The 17% decrease of $31.8 million was primarily due to decreased agribusiness revenue from lemons, avocados, wine grapes and farm management, partially offset by increased agribusiness revenues from oranges, as detailed below ($ in thousands):
Fiscal Year Ended October 31,
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•Lemons: The decrease for fiscal year 2025, compared to fiscal year 2024, was primarily due to lower prices, partially offset by increased volume of fresh and brokered lemons sold and other lemon sales. Fresh carton sales were $83.8 million and $84.0 million, in aggregate, on 4.7 million and 4.5 million cartons of lemons sold at average per carton prices of $17.74 and $18.87 for fiscal years 2025 and 2024, respectively. Lemon revenue included brokered lemons and other lemon sales of $21.6 million and $32.0 million, packing and handling revenue of $17.9 million and $17.1 million, and lemon by-product sales of $1.7 million and $3.0 million for fiscal years 2025 and 2024, respectively.
•Avocados: The decrease for fiscal year 2025, compared to fiscal year 2024, was due to decreased volume and lower prices of avocados sold. The California avocado crop typically experiences alternating years of high and low production due to plant physiology. We sold 7.4 million and 15.1 million pounds of avocados at average prices per pound of $1.60 and $1.67 for fiscal years 2025 and 2024, respectively.
•Oranges: The increase for fiscal year 2025, compared to fiscal year 2024, was primarily due to increased volume and higher prices of oranges sold. We sold 409,000 and 280,000 cartons of oranges at an average price per carton of $18.93 and $18.53 for fiscal years 2025 and 2024, respectively.
•Specialty citrus and wine grapes: The decrease for fiscal year 2025, compared to fiscal year 2024, was primarily due to decreased volume of wine grapes sold. We sold $1.8 million and $2.9 million of wine grapes during fiscal years 2025 and 2024, respectively.
•Farm management: Farm management revenue was comprised primarily of Northern Properties farming, management and operations services and decreased for fiscal year 2025 compared to fiscal year 2024 due to the FMA termination effective March 31, 2025.
•Other: Other revenue, comprised primarily of fallowing and shipping, decreased for fiscal year 2025, compared to fiscal year 2024, due to decreased shipping revenue.
Other operations revenue for fiscal year 2025 was $6.0 million, compared to $5.6 million for fiscal year 2024.
Costs and Expenses
Total costs and expenses for fiscal year 2025 were $180.1 million, compared to $197.7 million for fiscal year 2024. The 9% decrease of $17.6 million was primarily due to decreased agribusiness costs and expenses and selling, general and administrative expenses. Agribusiness costs and expenses are detailed below ($ in thousands):
Fiscal Year Ended October 31,
•Packing costs: Packing costs consist primarily of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies and facility operating costs. The increase for fiscal year 2025, compared to fiscal year 2024, was primarily due to increased volume, higher labor costs, and higher packing costs due to a $2.1 million contract termination fee related to our Commercial Packinghouse License Agreement with Sunkist. We packed and sold 4.7 million and 4.5 million cartons of lemons at average per carton costs of $10.03 and $9.60 for fiscal years 2025 and 2024, respectively.
•Harvest costs: The decrease in harvest costs for fiscal year 2025, compared to fiscal year 2024. was primarily due to decreased volume of lemons and avocados harvested.
•Growing costs: Growing costs, also referred to as cultural costs, consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation. The decrease for fiscal year 2025, compared to fiscal year 2024, was primarily due to the decrease in farm management growing costs related to the FMA termination and farm management decisions made in response to weather, harvest timing and crop conditions.
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•Third-party grower and supplier costs: We sell fruit that we grow and fruit that we procure from other growers and suppliers. The cost of procuring fruit from other growers and suppliers is referred to as third-party grower and supplier costs. The decrease for fiscal year 2025, compared to fiscal year 2024, was primarily due to a decrease in incurred costs for brokered fruit for resale of $27.5 million compared to $31.3 million, respectively, partially offset by an increase in incurred costs of third party grower fruit of $42.5 million compared to $40.9 million, respectively. Of the 4.7 million and 4.5 million cartons of lemons packed and sold, 3.7 million (78%) and 3.2 million (72%) were procured from third-party growers at average per carton prices of $11.55 and $12.76 for fiscal years 2025 and 2024, respectively.
•Other costs: The decrease in other costs for fiscal year 2025, compared to fiscal year 2024, was due to decreased freight costs.
•Depreciation and amortization: The increase in depreciation and amortization expenses for fiscal year 2025, compared to fiscal year 2024, was primarily due to increases in agribusiness depreciation and amortization of finance leases.
Other operations expenses for fiscal year 2025 were $4.5 million compared to $5.3 million for fiscal year 2024. The decrease in other operations expenses was primarily due to severance benefits paid in fiscal year 2024 and decreased residential and commercial rental expenses.
Impairment of intangible asset was $0.6 million for fiscal year 2024. There was no impairment of intangible asset for fiscal year 2025.
Gain on sales of water rights was $1.5 million for fiscal year 2025. There was no sale of water rights for fiscal year 2024.
Loss (gain) on disposal of assets, net for fiscal year 2025 was $0.7 million compared to $(0.5) million for fiscal year 2024. The 2025 loss primarily relates to the disposal of orchards and the 2024 gain primarily relates to a deferred gain on the LLCB II sale.
Selling, general and administrative expenses for fiscal year 2025 were $24.5 million compared to $27.5 million for fiscal year 2024. The $3.0 million decrease was primarily due to:
•$5.3 million net decrease in salaries, benefits and incentive compensation;
•$1.0 million net increase in allowance for receivables from foreign related party, net; and
•$1.3 million net increase in other general and administrative expenses.
Other (Expense) Income
Total other (expense) income for fiscal year 2025 was $(0.6) million compared to $17.7 million for fiscal year 2024. The $18.3 million decrease in total other income was primarily due to:
•$17.6 million decrease of equity in earnings of investments, net, primarily due to LLCB’s closing of 554 residential homesites in fiscal year 2024;
•$0.6 million increase of interest expense, net of patronage dividends; and
•$0.1 million decrease of other income, net.
Income Taxes
We recorded an income tax benefit (provision) of $4.6 million and $(4.4) million on pre-tax (loss) income of $(21.0) million and $11.5 million for fiscal years 2025 and 2024, respectively. The tax benefit recorded for fiscal year 2025 differs from the U.S. federal statutory tax rate of 21.0% primarily due to foreign jurisdictions that are taxed at different rates, state taxes, tax impact of stock-based compensation, executive compensation, nondeductible tax items and valuation allowances on certain deferred tax assets of foreign subsidiaries. Our effective tax rate for fiscal years 2025 and 2024 was 22.1% and 37.9%, respectively.
Net Loss Attributable to Noncontrolling Interests, Net
Net loss attributable to noncontrolling interests represents 10% and 49% of the net loss of PDA and Trapani Fresh, respectively, for fiscal years 2025 and 2024. Fiscal year 2025 includes 45.5% of the net income of Del Mar for the period August 4, 2025 to October 31, 2025.
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Segment Results of Operations
We operate in four reportable operating segments: fresh lemons, lemon packing, avocados and other agribusiness. Our reportable operating segments are strategic business units with different products and services, distribution processes and customer bases. We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. Each segment is subject to review and evaluations related to current market conditions, market opportunities and available resources. During fiscal year 2025, the Company changed its presentation of fresh lemons and lemon packing revenue and costs to remove reference to intersegment revenue and costs and eliminations. Prior years’ information has been restated to conform to the current year’s presentation. The Company adopted ASU 2023-07 as of fiscal year 2025 and, as a result, expanded its segment information to include significant segment expenses and other segment items. See Note 20 - Segment Information for additional information regarding our operating segments.
Segment information for fiscal year 2025 is as follows (in thousands):
Costs and expenses, excluding depreciation and amortization:
Gain on sales of water rights — — — — — (1,488) (1,488)
Loss on disposal of assets, net — — — — — 706 706
Selling, general and administrative — — — — — 24,200 24,200
Segment information for fiscal year 2024 is as follows (in thousands):
Costs and expenses, excluding depreciation and amortization:
Impairment of intangible asset — — — — — 643 643
Gain on disposal of assets, net — — — — — (507) (507)
Selling, general and administrative — — — — — 26,876 26,876
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Fiscal Year 2025 Segment Information Compared to Fiscal Year 2024 Segment Information
The following analysis should be read in conjunction with the previous section “Results of Operations.”
Fresh Lemons
Fresh lemons segment revenue is comprised of sales of fresh lemons net of pack charge, lemon by-products, brokered lemons and other lemon revenue. Our fresh lemons segment total net revenues for fiscal year 2025 were $75.8 million compared to $86.9 million for fiscal year 2024. The 13% decrease of $11.1 million was primarily due to:
•Brokered lemons and other lemon sales decrease of $10.4 million;
•Lemon by-products sales decrease of $1.3 million; and
•Fresh lemons sales net of pack charge increase of $0.6 million.
Costs and expenses associated with our fresh lemons segment include growing costs, harvest costs and cost of lemons we procure from third-party growers and suppliers. Our fresh lemons segment costs and expenses for fiscal year 2025 were $77.6 million compared to $84.2 million for fiscal year 2024. The 8% decrease of $6.6 million was primarily due to:
•Third-party grower and supplier costs decrease of $4.1 million;
•Growing costs decrease of $1.4 million; and
•Harvest costs decrease of $1.1 million.
Lemon Packing
Lemon packing segment revenue is comprised of packing revenue and packing and handling revenue. Our lemon packing segment total net revenues for fiscal year 2025 were $49.1 million compared to $49.3 million for fiscal year 2024.
Costs and expenses associated with our lemon packing segment consist of the costs to pack lemons for sale such as labor and benefits, cardboard cartons, fruit treatments, packing and shipping supplies, subcontracted and facility operating costs. Our lemon packing costs and expenses for fiscal year 2025 were $47.4 million compared to $42.8 million for fiscal year 2024. The 11% increase of $4.6 million was primarily due to increased volume of lemons packed and sold, higher labor costs, and higher packing costs due to a $2.1 million contract termination fee.
Lemon packing segment operating income per carton sold for fiscal year 2025 was $0.37 compared to $1.46 for fiscal year 2024.
Avocados
Our avocados segment revenue for fiscal year 2025 was $11.7 million compared to $25.1 million for fiscal year 2024. The 53% decrease of $13.4 million was primarily due to decreased volume and lower prices.
Costs and expenses associated with our avocados segment include growing and harvest costs. Our avocados segment costs and expenses for fiscal year 2025 were $6.0 million compared to $7.3 million for fiscal year 2024. The 18% decrease of $1.3 million was primarily due to:
•Harvest costs decrease of $1.7 million; and
•Growing costs increase of $0.4 million.
Other Agribusiness
Our other agribusiness segment total net revenues for fiscal year 2025 were $17.0 million compared to $24.6 million for fiscal year 2024. The 31% decrease of $7.6 million was primarily due to:
•Farm management revenue decrease of $8.6 million;
•Specialty citrus and wine grape revenues decrease of $1.1 million;
•Other revenue decrease of $0.5 million; and
•Orange revenue increase of $2.6 million.
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Costs and expenses associated with our other agribusiness segment include growing costs, harvest costs, brokered fruit costs and shipping costs. Our other agribusiness costs and expenses for fiscal year 2025 were $15.6 million compared to $23.4 million for fiscal year 2024. The 33% decrease of $7.8 million was primarily due to:
•Growing costs decrease of $9.0 million;
•Shipping costs decrease of $0.5 million;
•Harvest costs decrease of $0.3 million; and
•Brokered fruit costs increase of $2.0 million.
Total agribusiness depreciation and amortization expenses for fiscal year 2025 were $8.2 million compared to $7.1 million for fiscal year 2024.
Corporate and Other
Our corporate and other operations revenues for fiscal year 2025 were $6.0 million compared to $5.6 million for fiscal year 2024.
Costs and expenses in our corporate and other operations for fiscal years 2025 and 2024 were $24.4 million and $31.6 million, respectively, and include selling, general and administrative costs and expenses, impairment of intangible asset, gain on sales of water rights, loss (gain) on disposal of assets and gain on remeasurement of previously held equity method investment not allocated to the operating segments. Depreciation and amortization expenses for fiscal year 2025 were $1.0 million compared to $1.3 million for fiscal year 2024.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are cash and cash flows generated from our operations, use of our revolving credit facility, sales of assets and distributions from our equity investments. Our liquidity and capital position fluctuate during the year depending on seasonal production cycles, weather events and demand for our products. Typically, our first and last fiscal quarters coincide with the fall and winter months during which we are growing crops that are harvested and sold in the spring and summer, which are our second and third quarters. To meet working capital demand and investment requirements of our agribusiness and real estate development projects and to supplement operating cash flows, we utilize our revolving credit facility to fund agricultural inputs until sufficient returns from crops allow us to repay amounts borrowed. Raw materials needed to propagate the various crops grown by us consist primarily of fertilizer, herbicides, insecticides, fuel and water, all of which are readily available from local sources.
Material contractual obligations arising in the normal course of business consist primarily of purchase obligations, long-term variable rate debt and related interest payments and operating and finance leases. See Note 11 - Long-Term Debt and Note 12 - Leases for amounts outstanding as of October 31, 2025, related to debt and leases. Purchase obligations consist of contracts primarily related to packing supplies, the majority of which are due in the next three years.
We believe that the cash flows from operations and available borrowing capacity from our existing credit facilities will be sufficient to satisfy our capital expenditures, debt service, working capital needs and other contractual obligations for the next 12 months. We believe our revenue generating operations, distributions from equity investments and credit facilities will generate sufficient cash needed to operate beyond the next 12 months. In addition, we have the ability to control a portion of our investing and financing cash flows to the extent necessary based on our liquidity demands.
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Cash Flows from Operating Activities
Net cash (used in) provided by operating activities was $(6.0) million and $17.9 million for fiscal years 2025 and 2024, respectively. The significant components of our cash flows (used in) provided by operating activities were as follows:
•Net (loss) income was $(16.4) million and $7.2 million for fiscal years 2025 and 2024, respectively. The components of net loss for fiscal year 2025, compared to net income for fiscal year 2024, primarily consists of an increase in operating loss of $14.2 million, a decrease in total other income of $18.3 million and an increase in income tax benefit of $9.0 million.
•Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
◦Adjustments provided $15.2 million and $9.0 million for fiscal years 2025 and 2024, respectively, primarily related to depreciation and amortization, gain on remeasurement of previously held equity method investment, gain on sales of water rights, stock compensation expense, equity in earnings of investments, net, cash distributions from equity investments and deferred income taxes.
◦Changes in operating assets and liabilities used $4.9 million and provided $1.7 million of operating cash for fiscal years 2025 and 2024, respectively, primarily related to accounts payable/growers and suppliers payable, accrued liabilities/payables to related parties, income taxes receivable and other long-term liabilities.
Cash Flows from Investing Activities
▪The $18.3 million of net cash used in investing activities for fiscal year 2025 was comprised primarily of capital expenditures of $13.5 million mainly related to orchard development and $4.1 million related to acquiring additional shares of Del Mar.
▪The $9.2 million of net cash used in investing activities for fiscal year 2024 was comprised primarily of capital expenditures of $9.4 million related to orchard and vineyard development.
Cash Flows from Financing Activities
•The $22.8 million of net cash provided by financing activities for fiscal year 2025 was comprised primarily of net borrowings of long-term debt of $31.9 million, partially offset by common and preferred stock dividends of $5.9 million and exchange of common stock of $2.0 million.
•The $9.3 million of net cash used in financing activities for fiscal year 2024 was comprised primarily of common and preferred stock dividends of $5.9 million and exchange of common stock of $2.3 million.
Transactions Affecting Liquidity and Capital Resources
Credit Facilities and Long-Term Debt
We finance our working capital and other liquidity requirements primarily through cash from operations, distributions from equity investments and from our Credit Facility with AgWest Farm Credit, formerly known as Farm Credit West, (the "Lender"). In June 2025, we entered into a Master Loan Agreement (the “MLA”) dated June 26, 2025, together with a revolving credit facility supplement (the “Revolving Credit Supplement”) and a non-revolving credit facility supplement (the “Non-Revolving Credit Supplement” and, together with the Revolving Credit Supplement, the “Supplements”). The MLA governs the terms of the Supplements. The MLA amends and restates the previous Master Loan Agreement between the Company and the Lender and extends the principal repayment to July 1, 2030. Additional information regarding these loans can be found in Note 11- Long-Term Debt.
The Supplements provide aggregate borrowing capacity of $115.0 million, comprised of $114.0 million under the Revolving Credit Supplement and $1.0 million under the Non-Revolving Credit Supplement which can be used solely to support calls on Letters of Credit. There are no amounts outstanding on the Non-Revolving Credit Supplement. As of October 31, 2025, our outstanding borrowings under the Revolving Credit Supplement were $72.5 million and we had $41.6 million available to borrow.
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The MLA subjects us to affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, requirements to maintain and repair any collateral, restrictions on the sale of assets, restrictions on the use of proceeds, prohibitions on the incurrence of additional debt and restrictions on the purchase or sale of major assets of our business. We were subject to an annual financial covenant that required us to maintain compliance with a specific debt service coverage ratio of 1.0:1.0 for the fiscal year ending October 31, 2025, and 1.25:1.0 for any fiscal year ending thereafter. In September 2025, the Lender modified the annual debt service coverage ratio covenant to defer measurement as of October 31, 2025. In December 2025, the Lender modified the annual debt service coverage ratio covenant to defer measurement as of October 31, 2026 and resume a debt service coverage ratio of 1.25:1.0 measured as of October 31, 2027 and for any fiscal year ending thereafter.
We were also subject to a quarterly financial covenant that required us to maintain compliance with a specific total net leverage ratio as of the end of any fiscal quarter beginning July 31, 2026. In December 2025, the Lender modified this quarterly financial covenant to defer measurement through July 31, 2027 and resume measurement as of October 31, 2027. Additionally, in December 2025, the Lender added a new quarterly financial covenant for the period January 31, 2026 through July 31, 2027 which requires us to maintain a specific debt to capitalization ratio.
We received annual patronage dividends from the Lender of $0.6 million for fiscal years 2025 and 2024.
Real Estate Development Joint Venture
On April 9, 2025, we received a cash distribution of $10.0 million representing our share of a $20.0 million distribution from our joint venture, Harvest at Limoneira. As of October 31, 2025, the 50%-owned unconsolidated joint venture had $31.2 million of cash and cash equivalents on hand.
Dividends
The holders of the Series B Convertible Preferred Stock (the “Series B Stock”) and the Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) are entitled to receive cumulative cash dividends. Such preferred dividends paid totaled $0.5 million in each of the fiscal years 2025 and 2024.
Cash dividends declared in each of the fiscal years 2025 and 2024 totaled $0.30 per common share and such dividends paid totaled $5.4 million for both fiscal years 2025 and 2024.
Income Taxes
We paid income taxes of $0.7 million and $5.2 million for fiscal years 2025 and 2024, respectively.
Real Estate Development Activities and Related Capital Resources
As noted under “Transactions Affecting Liquidity and Capital Resources,” we have the ability to control a portion of our investing cash flows to the extent necessary based upon our liquidity demands. In order for our real estate development operations to reach their maximum potential benefit to us, however, we will need to be successful over time in identifying other third-party sources of capital to collaborate with us to move those development projects forward. While we are frequently in discussions with potential external sources of capital in respect to all of our development projects, current market conditions for California real estate projects make it difficult to predict the timing and amounts of future capital that will be required to complete the development of our projects.
In November 2015, we entered into a joint venture with Lewis for the residential development of our East Area I real estate development project. To consummate the transaction, we formed LLCB as the development entity, contributed our East Area I property to the joint venture and sold a 50% interest in the joint venture to Lewis. The first phase of the project broke ground to commence mass grading in November 2017. Approved project plans currently include approximately 1,750 residential units and site improvements. A total of 1,261 residential units have closed from the project’s inception to October 31, 2025.
In October 2022, we entered into another joint venture with Lewis for the development of our 17-acre East Area I Retained Property. We formed LLCB II as the development entity, contributed our Retained Property to the joint venture and sold a 50% interest to Lewis for $8.0 million. We recorded a gain on the transaction of $4.7 million, of which $0.5 million was deferred and recognized in fiscal year 2024. Approved project plans currently include approximately 300 residential units and site improvements.
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The joint venture partners will share in the capital contributions to fund project costs until loan proceeds and/or revenues are sufficient to fund the projects. Since inception, each partner has made funding contributions of $21.4 million to LLCB and $3.2 million to LLCB II. In April 2025, we received a cash distribution of $10.0 million from LLCB and we expect to receive approximately $155.0 million from LLCB, LLCB II and East Area II over the next five years of the projects.
Trend Information
The commodity pricing for our fresh produce, and therefore our revenues and margins, is significantly impacted by consumer demand. The worldwide fresh produce industry has historically enjoyed consistent underlying demand and favorable growth dynamics. In recent years, the market for fresh produce has increased faster than the rate of population growth, supported by ongoing trends including greater consumer demand for healthy, fresh and convenient foods, increased retailer square footage devoted to fresh produce, and greater emphasis on fresh produce as a differentiating factor in attracting customers. Health-conscious consumers are driving much of the growth in demand for fresh produce. Over the past several decades, the benefits of natural, preservative-free and organic foods have become an increasingly significant element of the public dialogue on health and nutrition. As a result, consumption of fresh fruits and vegetables markedly increased. Conversely, a decrease in demand, as was seen during the COVID-19 pandemic as a result of restaurant closures, had the impact of reducing our pricing and therefore our revenues and margins.
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with GAAP requires us to develop critical accounting policies and make certain estimates, assumptions and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates and judgments on historical experience, available relevant data and other information that we believe to be reasonable under the circumstances, and we continue to review and evaluate these estimates. Actual results may materially differ from these estimates under different assumptions or conditions as new or additional information becomes available in future periods. For further information on significant accounting policies, see discussion in Note 2 - Summary of Significant Accounting Policies.
Impairment of Real Estate Development Projects – We evaluate our real estate development projects, held either by us or as included specifically within our investments in LLCB and LLCB II, for impairment on an ongoing basis. Our evaluation for impairment involves an initial assessment of each real estate development project to determine whether events or changes in circumstances exist that may indicate that the carrying amounts of, or investment in, real estate development projects are no longer recoverable. Possible indications of impairment may include events or changes in circumstances affecting the entitlement process, litigation, zoning, government regulation, geographical demand for new housing or commercial property, and market conditions related to residential or commercial land lots. When events or changes in circumstances exist, we further evaluate the real estate development projects for impairment by a) comparing undiscounted future cash flows expected to be generated over the life of the real estate development projects to the respective carrying amount for our real estate development or b) determining if our equity in investment incurred an other-than-temporary decline in value.
We make significant judgments in evaluating each real estate development project, as held by us or within our investments in LLCB and LLCB II, for possible indications of impairment. These judgments may relate to the identification of appropriate and comparable market prices, the consideration of changes to legal factors or the business climate, the likelihood of successfully completing the entitlement process, changes in zoning or government regulation, and demand for new housing. Changes in these judgments could have a significant impact on real estate development or equity in investments. No impairment loss has been recognized on any real estate development and no other-than-temporary-impairment has been recognized on our equity in LLCB or LLCB II, for fiscal years 2025, 2024 and 2023.
The impairment calculation for real estate developments held by us compares the carrying value of the asset to the asset’s estimated future cash flows (undiscounted). If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on estimated future cash flows (discounted). We recognize an impairment loss equal to the amount by which the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset will be its new cost basis. Restoration of a previously recognized impairment loss is prohibited. If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to impairment losses that could be material to our results of operations.
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Whenever events or changes in circumstances indicate that the carrying amount of our equity investments in LLCB and LLCB II might not be recoverable, then we determine whether an impairment is other-than-temporary. If we conclude the impairment is other-than-temporary, we determine the estimated fair value of the investment by performing a discounted cash flow or market approach analysis and recognize an other-than-temporary impairment to reduce the investment to its estimated fair value.
We believe that the accounting estimate related to impairment of real estate development projects held by us, or other-than-temporary impairment of our equity investments in LLCB and LLCB II, is a critical accounting estimate because it is very susceptible to change from period to period; it requires management to make assumptions about future prices, production, and costs, and the potential impact of a loss from impairment could be material to our earnings. Management’s assumptions regarding future cash flows from real estate development projects or return on equity of our investments in LLCB and LLCB II have fluctuated in the past due to changes in prices, production and costs and are expected to continue to do so in the future as market conditions change.
Recent Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies for information concerning recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Borrowings under the AgWest Farm Credit Facility are subject to variable interest rates. These variable interest rates subject us to the risk of increased interest costs associated with any upward movements in interest rates. For the AgWest Farm Credit Facility, our borrowing interest rate is an internally calculated rate based on an AgWest Farm Credit internal method that follows the changing market interest rates and the cost to fund variable-rate loans. Rate changes are expected to be generally the same as the Federal Open Market Committee (the “FOMC”) recommended changes; however the changes may be marginally different than the FOMC’s recommendation. As of October 31, 2025, our total debt outstanding under the AgWest Farm Credit Facility was $72.5 million.
Based on our level of borrowings as of October 31, 2025, a 100 basis points increase in interest rates would increase our interest rate expense by $0.7 million for fiscal year 2026 and by an annual average of $0.7 million for each of the three subsequent fiscal years. Additionally, a 100 basis points increase in the interest rate would decrease our net income by $0.5 million for fiscal year 2026 and by an annual average of $0.5 million for each of the three subsequent fiscal years. We have strategies in place to manage our exposure to interest rate risk, including the potential early pay down of outstanding debt under the AgWest Farm Credit Facility. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for additional information.
Item 8. Financial Statements and Supplementary Data
Limoneira Company
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm 46
Consolidated Financial Statements of Limoneira Company
Consolidated Balance Sheets as of October 31, 2025 and 2024 48
Notes to Consolidated Financial Statements 54
All schedules are omitted for the reason that they are not applicable or the required information is included in the Consolidated Financial Statements or the notes thereto.
45
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Limoneira Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Limoneira Company and subsidiaries (the “Company”) as of October 31, 2025 and 2024, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity and temporary equity, and cash flows, for each of the three years in the period ended October 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audits and the report of Ernst & Young LLP, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended October 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October 31, 2025, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 23, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting based on our audit.
We did not audit the financial statements of Limoneira Lewis Community Builders, LLC (“LLCB”), the Company's investment, which is accounted for by use of the equity method. The accompanying financial statements of the Company include, before the basis difference and related amortization discussed in Note 7, its equity in investment in LLCB of $54,076,000 and $63,581,000 as of October 31, 2025 and 2024, respectively, and its equity earnings in LLCB of $498,000, $20,304,000, and $5,851,000 for the years ended October 31, 2025, 2024, and 2023, respectively. Those financial statements were audited by Ernst & Young LLP, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Company’s equity in investment and equity earnings in LLCB, is based solely on the report of Ernst & Young LLP.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits and the report of Ernst & Young LLP provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Real estate development assets held by the Company and equity in investment in LLCB – Impairment Indicators – Refer to Notes 2, 6, and 7 to the financial statements
46
Critical Audit Matter Description
The Company’s evaluation of real estate development projects, held either by the Company or as included specifically within its investment in LLCB, for impairment involves an initial assessment of each real estate development project to determine whether events or changes in circumstances exist that may indicate that the carrying amounts of, or investment in, real estate development projects are no longer recoverable. Possible indications of impairment may include events or changes in circumstances affecting the entitlement process, litigation, zoning, government regulation, geographical demand for new housing or commercial property, and market conditions related to residential or commercial land lots. When events or changes in circumstances exist, the Company further evaluates the real estate development projects for impairment by a) comparing undiscounted future cash flows expected to be generated over the life of the real estate development projects to the respective carrying amount for its real estate development or b) determining if its equity in investment has incurred an other-than-temporary decline in value.
The Company makes significant judgments in evaluating each real estate development project as held by them or within its investment in LLCB, for possible indications of impairment. These judgments may relate to the identification of appropriate and comparable market prices, the consideration of changes to legal factors or the business climate, the likelihood of successfully completing the entitlement process, changes in zoning or government regulation, and demand for new housing. Changes in these judgments could have a significant impact on real estate development or equity in investments. Real estate development assets held by the Company were $10,628,000, and equity in investments was $72,167,000 as of October 31, 2025 of which $58,416,000 was related to LLCB. For the year ended October 31, 2025, no impairment loss has been recognized on any real estate development and no other-than-temporary-impairment has been recognized on the Company’s equity in LLCB.
We identified the significant judgments made by management in evaluating real estate development assets held by the Company and equity in investment in LLCB, for possible indicators of impairment, as a critical audit matter. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions when determining whether events or changes in circumstances have occurred indicating that the carrying amount of real estate development assets held by the Company and equity in investment in LLCB may not be recoverable and whether management appropriately identified impairment indicators.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the evaluation of real estate development assets held by the Company and equity in investment in LLCB for possible indications of impairment included the following, among others:
•We tested the effectiveness of the controls over management’s identification of possible circumstances that may indicate that real estate development assets held by the Company or equity in investment in LLCB is no longer recoverable, including controls over management’s evaluation of the entitlement process, litigation, zoning, government regulation, geographical demand and market conditions.
•We evaluated management’s impairment analysis by:
–Searching for adverse asset-specific and/or market conditions by reviewing publicly available information on land values in the surrounding regions of the development, periodicals and news information relating to the Southern California real estate market
–Obtaining information from legal counsel and performing inquiries with management in order to evaluate any changes in the status of litigation matters affecting the real estate development assets and the potential impact on the ability to recover the accumulated costs, including any relevant government regulations and/or other matters impacting the entitlement process
–Obtaining comparable land sales in the area and comparing such data to information used by management with the assistance of our fair value specialists
–Developing an independent expectation of impairment indicators and comparing such expectation to management’s analysis
/s/ Deloitte & Touche LLP
Los Angeles, California
December 23, 2025
We have served as the Company’s auditor since 2019.
47
LIMONEIRA COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
October 31,
Assets
Current assets:
Prepaid expenses and other current assets 4,444 3,849
Receivables/other from related parties, net 2,973 2,390
Assets held for sale 13,718 —
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Growers and suppliers payable 6,885 8,960
Current portion of long-term debt 31 559
Long-term liabilities:
Commitments and contingencies — —
Stockholders’ equity:
Accumulated other comprehensive loss (6,270) (6,614)
See Notes to Consolidated Financial Statements.
48
LIMONEIRA COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Years Ended October 31,
Net revenues:
Costs and expenses:
Impairment of intangible asset — 643 —
Gain on sales of water rights (1,488) — —
Loss (gain) on disposal of assets, net 706 (507) (28,849)
Gain on remeasurement of previously held equity method investment (2,852) — —
Gain on legal settlement — — (2,269)
Other (expense) income:
Interest expense, net of patronage dividends (1,553) (961) (494)
Net loss attributable to noncontrolling interests, net 375 542 283
Net (loss) income attributable to Limoneira Company (15,981) 7,716 9,400
Net (loss) income applicable to common stock $ (16,482) $ 7,215 $ 8,899
Basic net (loss) income per common share $ (0.93) $ 0.40 $ 0.50
Diluted net (loss) income per common share $ (0.93) $ 0.40 $ 0.50
See Notes to Consolidated Financial Statements.
49
LIMONEIRA COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
Years Ended October 31,
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 344 (948) 518
Pension settlement cost, net of tax of zero, zero and $756 — — 1,944
Total other comprehensive income (loss) 344 (948) 2,242
Comprehensive loss attributable to noncontrolling interests, net 375 542 283
See Notes to Consolidated Financial Statements.
50
LIMONEIRA COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY
(in thousands, except share data)
Stockholders’ Equity Temporary Equity
Shares Amount Capital Earnings (Loss) Income Stock Interest Equity Stock Stock
Dividends - common ($0.30 per share) — — — (5,382) — — — (5,382) — —
Dividends - Series B ($8.75 per share) — — — (129) — — — (129) — —
Dividends - Series B-2 ($40 per share) — — — (372) — — (372) — —
Exchange of common stock (39,472) (1) (566) — — — — (567) — —
Noncontrolling interest adjustment — — — — — — (117) (117) — —
Other comprehensive income, net of tax — — — — 2,242 — — 2,242 — —
Dividends - common ($0.30 per share) — — — (5,406) — — — (5,406) — —
Dividends - Series B ($8.75 per share) — — — (129) — — — (129) — —
Dividends - Series B-2 ($40 per share) — — — (372) — — — (372) — —
Noncontrolling interest adjustment — — — — — — (118) (118) — —
Other comprehensive loss — — — — (948) — — (948) — —
Dividends - common ($0.30 per share) — — — (5,414) — — — (5,414) — —
Dividends - Series B ($8.75 per share) — — — (129) — — — (129) — —
Dividends - Series B-2 ($40 per share) — — — (372) — — — (372) — —
Acquired noncontrolling interest — — — — — — 9,335 9,335 — —
Noncontrolling interest adjustments — — — — — — (194) (194) — —
Other comprehensive income — — — — 344 — — 344 — —
See Notes to Consolidated Financial Statements.
51
LIMONEIRA COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended October 31,
Operating activities
Impairment of intangible asset — 643 —
Loss (gain) on disposal of assets, net 706 (507) (28,849)
Gain on remeasurement of previously held equity method investment (2,852) — —
Gain on sales of water rights (1,488) — —
Gain on legal settlement — — (853)
Equity in earnings of investments, net (798) (18,356) (5,322)
Changes in operating assets and liabilities:
Accounts receivable and receivables/other from related parties 466 1,105 815
Prepaid expenses and other current assets (332) 353 1,487
Accounts payable and growers and suppliers payable (1,718) (3,343) (1,772)
Accrued liabilities and payables to related parties (2,918) 3,780 (2,921)
Net cash (used in) provided by operating activities (6,009) 17,853 (15,870)
Investing activities
Net proceeds from legal settlement — — 853
Net proceeds from sale of real estate development assets — — 2,577
Proceeds from sales of water rights 1,740 — —
Cash distributions from Trapani Fresh 41 122 122
Collection on notes receivable 68 132 155
Equity investment contributions and capitalized interest (2,742) (693) (847)
Cash distributions from equity investment 297 148 —
Investments in mutual water companies and water rights (514) (526) (523)
Net cash (used in) provided by investing activities (18,347) (9,187) 90,577
Financing activities
Principal paid on finance leases and equipment financings (1,029) (698) (491)
Net cash provided by (used in) financing activities 22,836 (9,290) (71,922)
Effect of exchange rate changes on cash 33 (11) (11)
52
LIMONEIRA COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
Years Ended October 31,
Supplemental disclosures of cash flow information
Cash paid during the period for income taxes, net $ 707 $ 5,194 $ 7,229
Non-cash investing and financing activities:
Capital expenditures accrued but not paid at period-end $ 636 $ 382 $ 309
Cancellation of loan guarantee related to equity investment $ — $ 1,080 $ —
See Notes to Consolidated Financial Statements.
53
LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Business
Limoneira Company (together with its consolidated subsidiaries, the “Company”) engages primarily in growing citrus and avocados, harvesting citrus, and packing, marketing and selling citrus. The Company is also engaged in residential rentals and other rental operations and real estate development activities. The Company markets and sells citrus directly to food service, wholesale and retail customers throughout the United States, Canada, Asia and certain other international markets.
On June 6, 2025, Limoneira entered into a Commercial Packinghouse License Agreement with Sunkist Growers, Inc., a nonprofit marketing cooperative (“Sunkist”), effective as of November 1, 2025. The agreement permits us to grade, label, pack, prepare for marketing by Sunkist and ship Sunkist grower fruit, and to use Sunkist trademarks in these activities. The agreement has an initial term of three years with automatic one-year extensions. Beginning November 1, 2025, Sunkist performs the Company’s sales and marketing operations.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and the accounts of all the subsidiaries and investments in which the Company holds a controlling interest. The consolidated financial statements represent the consolidated balance sheets, statements of operations, statements of comprehensive (loss) income, statements of stockholders’ equity and temporary equity and statements of cash flows of Limoneira Company and consolidated subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The Company considers the criteria established under the Financial Accounting Standards Board (“FASB”) – Accounting Standards Code (“ASC”) 810, Consolidations, and the effect of variable interest entities, in its consolidation process.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts Receivable
The Company grants credit in the course of its operations to cooperatives, companies and lessees of the Company’s facilities. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The Company provides allowances on its receivables as required based on accounts receivable aging and other factors. As of October 31, 2025 and 2024 the allowances totaled $600,000 and $355,000, respectively. Credit losses were immaterial, $235,000, and immaterial for fiscal years 2025, 2024 and 2023, respectively.
Concentrations and Geographic Information
Concentrations of credit risk with respect to revenues and accounts receivable are limited due to a large, diverse customer base. One individual customer represented 16% of revenues for fiscal year 2025 and two individual customers represented 19% and 12% of accounts receivable, net as of October 31, 2025.
No individual supplier represented 10% of accounts payable as of October 31, 2025.
Lemons procured from third-party growers were 78%, 72% and 54% of the Company's domestic lemon supply for fiscal years 2025, 2024 and 2023, respectively. Two third-party growers and suppliers were 25% and 23% of growers and suppliers payable as of October 31, 2025.
The Company maintains its cash in federally insured financial institutions. The account balances at these institutions periodically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of risk related to amounts on deposit in excess of FDIC insurance coverage.
Cultural Costs
Growing costs, also referred to as cultural costs, consist of orchard maintenance costs such as cultivation, fertilization and soil amendments, pest control, pruning and irrigation. Harvest costs are comprised of labor and equipment expenses incurred to harvest and deliver crops to the packinghouses.
54
LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (continued)
Cultural Costs (continued)
Certain of the Company’s crops have distinct growing periods and distinct harvest and selling periods, each of which lasts approximately four to eight months. During the growing period, cultural costs are capitalized as they are associated with benefiting and preparing the crops for the harvest and selling period. During the harvest and selling period, harvest costs and cultural costs are expensed when incurred and capitalized cultural costs are amortized as components of agribusiness costs and expenses.
Due to climate, growing conditions and the types of crops grown, certain of the Company’s crops may be harvested and sold on a year-round basis. Accordingly, the Company does not capitalize cultural costs associated with these crops and therefore such costs, as well as harvest costs associated with these crops, are expensed to operations when incurred as components of agribusiness costs and expenses.
Most cultural costs, including amortization of capitalized cultural costs, and harvest costs are associated with and charged to specific crops. Certain other costs, such as property taxes, indirect labor, including farm supervision and management, and irrigation that benefit multiple crops are allocated to crops on a per acre basis.
Income Taxes
Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.
Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
Property, Plant and Equipment
Property, plant and equipment is stated at original cost, net of accumulated depreciation. Depreciation is computed using the straight-line method at rates based upon the estimated useful lives of the related assets as follows (in years):
Land improvements 10 – 30
Buildings and building improvements 10 – 50
Equipment 5 – 20
Orchards and vineyards 20 – 30
Costs of planting and developing orchards are capitalized until the orchards become commercially productive. Planting costs consist primarily of the costs to purchase and plant nursery stock. Orchard development costs consist primarily of maintenance costs of orchards such as cultivation, pruning, irrigation, labor, pest control and fertilization, and interest costs during the development period. The Company ceases the capitalization of costs and commences depreciation when the orchards become commercially productive and orchard maintenance costs are accounted for as cultural costs as described above.
Capitalized Interest
Interest is capitalized on real estate development projects and significant construction in progress using the weighted average interest rate during the fiscal year. Capitalized interest is included in property, plant, and equipment, equity in investments and real estate development assets in the Company’s consolidated balance sheets.
55
LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (continued)
Real Estate Development Costs
The Company capitalizes the planning, entitlement, construction, development costs and interest associated with its various real estate projects. Costs that are not capitalized, which include property maintenance and repairs, general and administrative and marketing expenses, are expensed as incurred. A real estate development project is considered substantially complete upon the cessation of construction and development activities. Once a project is substantially completed, future costs are expensed as incurred. The Company capitalized costs related to real estate development of $427,000 and $214,000 for fiscal years 2025 and 2024, respectively.
Equity in Investments
Investments in unconsolidated joint ventures in which the Company has significant influence but less than a controlling interest, or is not the primary beneficiary if the joint venture is determined to be a Variable Interest Entity (“VIE”), are accounted for under the equity method of accounting and, accordingly, are adjusted for capital contributions, distributions, capitalized interest and the Company’s equity in net earnings or loss of the respective joint venture. The Company evaluates equity method investments for impairment whenever events or changes in circumstances exist that may indicate the investments are no longer recoverable or have incurred an other-than-temporary decline in value.
Long-Lived and Intangible Assets
Intangible assets consist primarily of customer relationships, trade names and trademarks and a non-competition agreement. The Company’s definite-life intangible assets are being amortized on a straight-line basis over their estimated lives of eight years. Acquired water and mineral rights are indefinite-life assets not subject to amortization. Assets held for sale are carried at the lower of cost or fair value less estimated cost to sell.
The Company evaluates long-lived assets, including its property and equipment, real estate development projects and definite-life intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the estimated fair value or undiscounted future cash flows from the use of an asset are less than the carrying value of that asset, a write-down is recorded to reduce the carrying value of the asset to its estimated fair value. The Company evaluates its indefinite-life intangible assets annually or whenever events or changes in circumstances indicate an impairment of the assets’ value may exist.
Goodwill
Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable. Goodwill impairment is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Goodwill impairment testing involves significant judgment and estimates.
Fair Values of Financial Instruments
Accounts receivable, accounts payable, growers and suppliers payable and accrued liabilities reported on the Company’s consolidated balance sheets approximate their fair values due to the short-term nature of the instruments.
Based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities, the fair value of long-term debt is approximately equal to its carrying amount as of October 31, 2025 and 2024.
Reclassifications
Certain reclassifications have been made to the prior years’ consolidated financial statements to conform to the current presentation. During fiscal year 2025, the Company changed its presentation of fresh lemons and lemon packing revenue and costs to remove reference to intersegment revenue, intersegment costs and expenses and eliminations within Note 20 - Segment Information.
56
LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (continued)
Comprehensive (Loss) Income
Comprehensive (loss) income represents all changes in a company’s net assets, except changes resulting from transactions with stockholders. Other comprehensive income or loss includes foreign currency translation items and defined benefit pension items. Accumulated other comprehensive loss is reported as a component of the Company’s stockholders’ equity.
The following table summarizes the changes in other comprehensive income (loss) by component at October 31(in thousands):
Minimum pension liability adjustments:
The following table summarizes the changes in accumulated other comprehensive (loss) income by component (in thousands):
Other comprehensive loss (948) — (948)
Other comprehensive income 344 — 344
Foreign Currency
The Company has foreign subsidiaries whose functional currencies are the Chilean Peso. Their balance sheets are translated to U.S. dollars at exchange rates in effect at the balance sheet date and their income statements are translated at average exchange rates during the reporting period. The resulting foreign currency translation adjustments are recorded as a separate component of accumulated other comprehensive (loss) income.
The Company’s foreign subsidiaries incurred immaterial aggregate foreign exchange transaction losses for fiscal year 2025 and $123,000 and $204,000 for fiscal years 2024 and 2023, respectively. These losses are included in selling, general and administrative expenses in the consolidated statements of operations.
57
LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (continued)
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from contracts with customers, and recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following steps:
•Identify the contract(s) with a customer;
•Identify the performance obligations in the contract;
•Determine the transaction price;
•Allocate the transaction price to the performance obligations in the contract;
•Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company determines the appropriate method by which it recognizes revenue by analyzing the nature of the products or services being provided as well as the terms and conditions of contracts or arrangements entered into with its customers. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A contract’s transaction price is allocated to each distinct good or service (i.e., performance obligation) identified in the contract and each performance obligation is valued based on its estimated relative standalone selling price.
The Company recognizes the majority of its revenue at a point in time when it satisfies a performance obligation and transfers control of the product to the respective customer. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of variable consideration such as allowances for estimated customer discounts or concessions, where applicable. The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period.
Agribusiness revenue - Revenue from lemon sales is generally recognized at a point in time when the customer takes control of the fruit from the Company’s packinghouse, which aligns with the transfer of title to the customer. The Company has elected to treat any shipping and handling costs incurred after control of the goods has been transferred to the customer as agribusiness costs.
The Company’s avocados are packed and sold by third-party packinghouses. The Company’s arrangements with its third-party packinghouses are such that the Company is the producer and supplier of the product, and the third-party packinghouses are the Company’s customers. The Company controls the product until it is delivered to the third-party packinghouses at which time control of the product is transferred to the third-party packinghouses and revenue is recognized.
Farm management revenue is recorded when services are provided for farming, management, orchard development, accounting and operations. Revenue is recorded gross for all expense reimbursements plus a fee for the services provided.
Revenue from insurance proceeds is recorded when the amount can be reasonably determined and upon establishment of the present right to payment. The Company recorded agribusiness revenues from insurance proceeds of $1,410,000, zero and $769,000 for fiscal years 2025, 2024 and 2023, respectively.
Advertising Expense
Advertising costs are expensed as incurred and were immaterial for fiscal years 2025, 2024 and 2023.
58
LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (continued)
Leases
Accounting for Leases as a Lessee - The Company enters into leases as a lessee generally for agricultural land, packinghouse facilities, equipment and vehicles. The Company determines if an arrangement is a lease or contains a lease at inception. Operating and finance leases are included in other assets, accrued liabilities and other long-term liabilities on its consolidated balance sheets. Lease right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis. Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses either its incremental borrowing rate based on the information available at commencement date, or the rate implicit in the lease, if known, in determining the present value of future payments.
Operating lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet as the Company has elected to recognize lease expense for these leases on a straight-line basis over the lease term. The Company had material leases with related parties which are further described in Note 14 - Related-Party Transactions.
Certain of the Company’s agricultural land agreements contain variable costs based on a percentage of the operating results of the leased property. Such variable lease costs are expensed as incurred. These land agreements also contain costs for non-lease components, such as water usage, which the Company accounts for separately from the lease components. For all other agreements, the Company generally combines lease and non-lease components in calculating the ROU assets and lease liabilities. See Note 12 - Leases for additional information.
Accounting for Leases as a Lessor - Leases in which the Company acts as the lessor include land, residential and commercial units and are all classified as operating leases. Certain of the Company’s contracts contain variable income based on a percentage of the operating results of the leased asset. Certain of the Company’s contracts contain non-lease components such as water, utilities and common area services. The Company has elected to not separate lease and non-lease components for its lessor arrangements and the combined component is accounted for entirely under ASC 842, Leases. The underlying asset in an operating lease arrangement is carried at depreciated cost within property, plant, and equipment, net on the consolidated balance sheets. Depreciation is calculated using the straight-line method over the useful life of the underlying asset. The Company recognizes operating lease revenue on a straight-line basis over the lease term.
Basic and Diluted Net (Loss) Incomeper Share
Basic net (loss) income per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of conversion of preferred stock. Diluted net (loss) income per common share is calculated using the weighted-average number of common shares outstanding during the period plus the dilutive effect of conversion of unvested, restricted stock and preferred stock.
Diluted net (loss) income per common share is calculated using the more dilutive method of either the two-class method or the treasury stock method. Unvested stock-based compensation awards that contain non-forfeitable rights to dividends as participating shares are included in computing earnings per share. The Company’s unvested, restricted stock awards qualify as participating shares.
Recent Accounting Pronouncements
FASB Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses, the chief operating decision maker (“CODM”), and how the CODM uses the reported measure(s) of segment profit or loss. This amendment also requires that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by FASB Accounting Standards Codification Topic 280, Segment Reporting, in interim periods. As disclosed in Note 20, Segment Information, the Company adopted this ASU for the fiscal year ending October 31, 2025 and applied it retrospectively to all periods presented in the financial statements. This ASU did not change the Company’s reportable segments and did not have a material effect on the Company’s consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (continued)
Recent Accounting Pronouncements (continued)
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU is effective for the Company’s annual reporting for fiscal year 2026. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
SEC Release No. 33-11275: The Enhancement and Standardization of Climate-Related Disclosures for Investors
In March 2024, the SEC adopted final rules under SEC Release No. 33-11275: The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires registrants to provide certain climate-related information in their registration statements and annual reports. The rules require information about a registrant’s climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition.
These requirements are effective for the Company in various fiscal years, starting with its fiscal year beginning November 1, 2026. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. On February 11, 2025, the SEC indicated it would ask the court to hold on scheduling further arguments while the SEC reassessed its position in the litigation. Subsequently, on March 27, 2025, the SEC voted to cease defending the rule in court. Despite withdrawing its defense, the SEC has not formally rescinded the rule. The Company is continuing to evaluate the potential impact of these final rules on its consolidated financial statements and disclosures.
ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date
ASU 2024-03 requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Specific disclosures include the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption, as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. Additionally, companies will need to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.
The effective date of ASU 2024-03 was clarified by ASU 2025-01. ASU 2024-03 is effective for the Company’s annual reporting for fiscal year 2028 and interim reporting beginning fiscal year 2029. Early adoption is permitted. ASU 2024-03 should be applied prospectively to financial statements issued for reporting periods beginning after the effective date but may be applied retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (“the Act”) was signed into law. The Act includes significant changes to U.S. tax and related laws. Some of the provisions of the Act affecting corporations include the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act (“TCJA”), modifications to the Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income international tax provisions, an increase in the limit of the deduction of interest expense to thirty percent of EBITDA, and reinstatement of one hundred percent bonus depreciation deduction from the TCJA for eligible property acquired after January 19, 2025. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Act’s financial reporting implications have been recognized in the Company’s income tax provision for the fiscal year ended October 31, 2025. The incorporation of these effects resulted in no material impact on the Company’s effective tax rate or its net deferred federal tax liabilities.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. Summary of Significant Accounting Policies (continued)
Recent Accounting Pronouncements (continued)
ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Topic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
Under current GAAP, entities are required to capitalize development costs incurred for internal-use software depending on the nature of the costs and the project stage during which they occur. The amendments in this ASU remove all references to software development project stages and require that an entity capitalize software costs when both: management has authorized and committed to funding the software project; and it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). The ASU is effective for the Company’s interim and annual reporting for fiscal year 2029, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
3. Asset Sales and Disposals
Northern Properties
In October 2022, the Company entered into a Purchase and Sale Agreement, as amended, (the “Agreement”) with PGIM Real Estate Finance, LLC (“PGIM”) to sell 3,537 acres of land and citrus orchards in Tulare County, California (the “Northern Properties”) for a purchase price of $100,405,000. On January 25, 2023, the Board approved the Agreement creating a binding agreement of the Company to sell the Northern Properties and the transaction closed on January 31, 2023. During the quarter ended April 30, 2023, the purchase price was decreased by $397,000 for reimbursement of certain cultural costs and prepaid expenses, resulting in a final purchase price of $100,008,000. After transaction costs the Company received net proceeds of $98,411,000.
The following is a summary of the transaction (in thousands):
Net cash proceeds received $ 85,494
Debt directly repaid through the transaction 12,917
Total net proceeds received 98,411
Less: net book value of assets sold
Prepaid expenses and other current assets 155
Property, plant and equipment, net 53,144
Intangible assets, net 12
Accrued liabilities (68)
Gain on disposal of assets $ 39,995
The proceeds were used to pay down all of the Company’s domestic debt except the AgWest Farm Credit non-revolving line of credit. The Northern Properties component, including an allocation of interest expense related to the debt directly repaid through the transaction, had a pretax loss of $1,667,000 for fiscal year 2023.
On January 31, 2023, the Company entered into a Farm Management Agreement (“FMA”) with an affiliate of PGIM to provide farming, management and operations services related to the Northern Properties. The FMA had an initial term expiring March 31, 2024, and thereafter continued from year to year unless earlier terminated under the terms of the FMA. Further, on January 31, 2023, the Company entered into a Grower Packing and Marketing Agreement (“GPMA”) to provide packing, marketing and selling services for lemons harvested on the Northern Properties for a minimum five-year term, subject to certain benchmarking standards. The FMA was terminated effective March 31, 2025 and the GPMA was terminated effective October 13, 2025.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. Asset Sales and Disposals (continued)
Pan de Azucar and San Pablo Orchards
The Company has a 90% interest in Fruticola Pan de Azucar S. A. (“PDA”) and a 100% interest in Agricola San Pablo, SpA (“San Pablo”), both of which are citrus orchards located near La Serena, Chile. The agricultural properties consist of approximately 500 acres of lemons, 100 acres of oranges and 2,900 acres of other land. On November 7, 2025, PDA and San Pablo (collectively, the “Sellers”), each entered into a Purchase and Sale Agreement and Novation Agreement (collectively, the “Purchase Agreements”) with San Pedro, SpA, a Chilean joint stock company (the “Buyer”) to sell the agricultural properties and related water rights for an aggregate purchase price of $14,967,000. The transactions closed upon transfer of the deeds simultaneously with the execution of the Purchase Agreements.
After a period of 60-90 days to record the transactions, which is customary in Chilean real estate transactions, the Buyer will make an initial payment to the Sellers in the aggregate amount of $6,800,000, of which approximately $742,000 will be deferred until certain requirements have been fulfilled. The remainder of the Buyer’s payment obligations, in the aggregate amount of $8,167,000, will be made in installment payments in amounts that will be calculated based on the excess free cash flows of the combined operations of the sold properties and a third citrus ranch owned by the Buyer, measured annually as of March 31 until the remaining balance is paid in full (the “Balance Payments”). Following the final Balance Payment, the Buyer will also make an additional payment in an amount equal to 50% of the prior year’s Balance Payment. The Buyer’s payment obligations are secured by a pledge on its corporate equity interests in favor of the Sellers.
The major classes of assets classified as held for sale as of October 31, 2025 were as follows (in thousands):
Property, plant and equipment, net $ 11,900
Intangible assets, net 1,818
Yuma Property
In December 2023, the Company sold 12 acres of real property located in Yuma, Arizona for a sales price of $775,000. After transaction and closing costs, the Company recorded a gain on disposal of assets of $187,000 during fiscal year 2024.
Cadiz Ranch
In April 2023, the Company determined that citrus farming operations were economically unviable on 670 acres of leased agricultural land at the Cadiz Ranch. As a result, the Company ceased farming operations at the Cadiz Ranch, disposed of the related property, plant and equipment and recorded a loss on disposal of assets of $9,012,000 during fiscal year 2023.
4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following as of October 31 (in thousands):
Prepaid supplies and insurance $ 1,398 $ 1,986
Income taxes receivable 184 —
Lemon supplier advances 4 295
Insurance proceeds receivable 1,510 —
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. Property, Plant and Equipment
Property, plant and equipment consist of the following as of October 31 (in thousands):
Depreciation expense was $8,164,000, $7,474,000 and $7,701,000 for fiscal years 2025, 2024 and 2023, respectively.
Refer to Note 3 - Asset Sales and Disposals and Note 7 - Equity in Investments for discussion on the Company’s significant property, plant and equipment transactions.
6. Real Estate Development
Real estate development assets are comprised primarily of land and land development costs for the East Area II property in the amounts of $10,624,000 and $10,201,000 as of October 31, 2025 and 2024, respectively.
East Area I, Retained Property and East Area II
In fiscal year 2005, the Company began capitalizing the costs of two real estate development projects east of Santa Paula, California, for the development of 550 acres of land into residential units, commercial buildings and civic facilities. In November 2015 (the “Transaction Date”), the Company entered into a joint venture with the Lewis Group of Companies (“Lewis”) for the residential development of its East Area I real estate development project. To consummate the transaction, the Company formed Limoneira Lewis Community Builders, LLC (“LLCB”) as the development entity, contributed its East Area I property to LLCB and sold a 50% interest to Lewis.
The Company and LLCB also entered into a Retained Property Development Agreement on the Transaction Date (the “Retained Property Agreement”). Under the terms of the Retained Property Agreement, LLCB transferred certain contributed East Area I property, which was entitled for commercial development, back to the Company (the “Retained Property”) and arranged for the design and construction of certain improvements to the Retained Property, subject to certain reimbursements by the Company. The balance in East Area II includes estimated costs incurred by and reimbursable to LLCB of $3,444,000 as of October 31, 2025 and 2024, which is included in payables to related parties in the Company’s consolidated balance sheets.
In January 2018, LLCB entered into a $45,000,000 unsecured Line of Credit Loan Agreement and Promissory Note (the “Loan”) with Bank of America, N.A. to fund early development activities. Effective as of February 22, 2023, the Loan maturity date was extended to February 22, 2024, and the maximum borrowing amount was reduced to $35,000,000. As of May 3, 2024, the Loan had no outstanding balance and was cancelled. As of October 31, 2025, LLCB had cash and cash equivalents of $31,227,000.
In February 2018, the Company and certain principals from Lewis guaranteed the obligations under the Loan. The guarantors were jointly and severally liable for all Loan obligations in the event of default by LLCB. Additionally, a Reimbursement Agreement was executed between the Lewis guarantors and the Company, which provided for unpaid liabilities of LLCB to be shared pro-rata by the Lewis guarantors and the Company in proportion to their percentage interest in LLCB. The guarantee continued in effect until all of the Loan obligations were fully paid and the Loan terminated. The $1,080,000 estimated value of the guarantee was recorded in the Company’s consolidated balance sheets and, upon cancellation of the Loan in May 2024, was removed from other long-term liabilities and the corresponding value in equity in investments.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. Real Estate Development (continued)
East Area I, Retained Property and East Area II (continued)
In October 2022, the Company entered into a joint venture with Lewis for the development of the Retained Property. The Company formed LLCB II, LLC (“LLCB II”) as the development entity, contributed the Retained Property to the joint venture and sold a 50% interest to Lewis. There was a deferred gain of $465,000 on the transaction, which was deferred and recognized in fiscal year 2024. The joint venture partners will share in the capital contributions to fund project costs until loan proceeds and/or revenues are sufficient to fund the project. The Company made contributions of $2,150,000 and $480,000 to LLCB II in fiscal year 2025 and 2024, respectively.
In April 2024, the Santa Paula City Council approved an amendment to increase the number of entitled lots at LLCB and LLCB II from 1,500 residential units to 2,050 residential units.
Through October 31, 2025, LLCB closed on lot sales representing 1,261 residential units since inception. The Company received cash distributions of $10,004,000 in fiscal year 2025 and $15,005,000 in fiscal year 2024 from LLCB.
7. Equity in Investments
Limco Del Mar, Ltd.
As of July 31, 2025, the Company had a 1.3% interest in Limco Del Mar, Ltd. (“Del Mar”) as a general partner and a 27.5% interest as a limited partner. Based on the terms of the partnership agreement, the Company may be removed as general partner without cause from the partnership upon the vote of the limited partners owning an aggregate of 50% or more interest in the partnership. Since the Company had significant influence, but less than a controlling interest, the Company’s investment in Del Mar was accounted for using the equity method of accounting.
To enable the Company to determine the strategy for Del Mar to enhance long term financial returns and to provide liquidity for limited partners, on March 21, 2025, the Company made an offer to purchase up to 224,859 limited partnership units of Del Mar from the limited partners (the “Offer”). On August 4, 2025, the Company closed the Offer and purchased 80,608 limited partnership units from 78 limited partners at a price of $70.00 per unit for approximately $5,643,000 (the “Purchase”). In addition to the Purchase, the Company also purchased 2,149 limited partnership units for $150,000 separate from the Offer. The Purchase increased the Company’s ownership from 28.8% to 54.5%. As a result of obtaining a controlling interest, Del Mar is now consolidated and reported as a subsidiary of the Company.
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LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Equity in Investments (continued)
Limco Del Mar, Ltd. (continued)
The transaction was accounted for as an asset acquisition. The Company elected to include the fair value of the previously held interest in the acquisition costs and recognized a gain of $2,852,000 on the remeasurement of the previously held equity method investment. Below is a summary of the fair value of the net assets acquired on the acquisition date based on a third-party valuation (in thousands):
Net assets acquired
Prepaid expenses and other current assets 72
Receivables/other from related parties 28
Land improvements 755
Equipment 54
Construction in progress 470
Other assets 592
Accounts payable (48)
Noncontrolling interest (9,335)
Net assets acquired 11,203
Cost of assets acquired
Cash paid for additional shares 5,643
Book value of equity method investment 2,568
Transaction costs 140
Total cost of assets acquired 8,351
Gain on remeasurement of previously held equity method investment $ 2,852
The unaudited, pro forma consolidated statement of operations as if Del Mar had been included in the consolidated results of the Company for the year ended October 31, 2025 would have resulted in revenues of $161,449,000 and net loss of $17,940,000.
Through August 3, 2025, the Company provided Del Mar with farm management, orchard land development and accounting services and received farm management revenue and expense reimbursements of $238,000, $128,000 and $206,000 for fiscal years 2025, 2024 and 2023, respectively. Del Mar also marketed lemons through the Company pursuant to its customary marketing agreements and the amount of lemons procured from Del Mar was $216,000, $1,182,000 and $1,161,000 for fiscal years 2025, 2024 and 2023, respectively. In addition, fruit proceeds due to Del Mar was $527,000 as of October 31, 2024 and was included in payables to related parties in the Company’s consolidated balance sheets.
Romney Property Partnership
In May 2007, the Company and an individual formed the Romney Property Partnership (“Romney”) for the purpose of owning and leasing an office building and adjacent lot in Santa Paula, California. The Company paid $489,000 in 2007 for 75% interest in Romney. The terms of the partnership agreement affirm the status of the Company as a noncontrolling investor in the partnership since the Company cannot exercise unilateral control over the partnership. Since the Company has significant influence, but less than a controlling interest, the Company’s investment in Romney is accounted for using the equity method of accounting. Net profits, losses and cash flows of Romney are shared by the Company, which receives 75% and the individual, who receives 25%.
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LIMONEIRA COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Equity in Investments (continued)
Rosales S.A.
The Company currently has a 47% equity interest in Rosales S.A. (“Rosales”) of which 35% was acquired in fiscal year 2014 and an additional 12% interest was acquired with the purchase of PDA in fiscal year 2017. Rosales is a citrus packing, marketing and sales business located in La Serena, Chile. In addition, the Company has the right to acquire the interest of the majority shareholder of Rosales upon death or disability of Rosales’ general manager for the fair value of the interest on the date of the event as defined in the shareholders’ agreement. Since the Company has significant influence, but less than a controlling interest, the Company’s investment in Rosales is accounted for using the equity method of accounting.
Rosales’ functional currency is the Chilean Peso. The following financial information has been translated to U.S. dollars. In addition, as a result of the Company’s acquisition of its equity interest, basis differences were identified between the historical cost of the net assets of Rosales and the proportionate fair value of the net assets acquired. Such basis differences aggregated to $1,683,000 on the acquisition date and are primarily comprised of intangible assets, including $343,000 of equity method goodwill. An additional $925,000 of basis differences were identified with the February 2017 PDA acquisition, including $143,000 of equity method goodwill. The $2,122,000 in basis differences exclusive of goodwill is being amortized over the estimated life of the underlying intangible assets as a reduction in the equity investment and an expense included in equity in earnings of investments. Amortization was immaterial, $76,000 and $87,000 for fiscal years for 2025, 2024 and 2023, respectively, and is estimated to be immaterial thereafter.
The Company recognized lemon and orange sales to Rosales of $4,102,000, $4,541,000 and $4,581,000 for fiscal years 2025, 2024 and 2023, respectively. The aggregate amount of lemons and oranges procured from Rosales was $7,125,000, $5,387,000 and $5,826,000 for fiscal years 2025, 2024 and 2023, respectively. Net amounts due to Rosales were $1,671,000 and $629,000 as of October 31, 2025 and 2024, respectively, and are included in payables to related parties in the Company’s consolidated balance sheets.
Limoneira Lewis Community Builders, LLC (“LLCB”)
As described in Note 6 – Real Estate Development, the Company has a joint venture with Lewis for the residential development of its East Area I real estate development project. In addition to the assessment performed by the Company of its investment in LLCB under the requirements of Regulation S-X Rule 4-08(g), the Company also assessed its investment in LLCB under the requirements of Regulation S-X Rule 3-09(b). LLCB was deemed significant for the fiscal years ended October 31, 2024 and 2023, but was not significant for the year ended October 31, 2025. The audited financial statements of LLCB for the years ended October 31, 2025, 2024 and 2023 are presented in this Annual Report on Form 10-K to comply with this rule. Additionally, there is a basis difference between the Company’s historical investment in the project and the amount recorded in members’ capital by LLCB of $54,076,000 as of October 31, 2025. The basis difference of $4,340,000 as of October 31, 2025 was primarily comprised of capitalized interest and certain other costs incurred by Limoneira Company during the development period. This basis difference is being amortized as lots are sold utilizing the relative sales value method and the amount amortized totaled $41,000, $2,545,000 and $717,000 for fiscal years 2025, 2024 and 2023, respectively. The Company’s share of LLCB’s net income prior to basis amortization was $498,000, $20,304,000 and $5,851,000 for fiscal years 2025, 2024 and 2023, respectively.
LLCB II, LLC (“LLCB II”)
As described in Note 6 - Real Estate Development, in October 2022, the Company formed a joint venture with Lewis for the residential development of its Retained Property. Control is shared with Lewis, therefore the Company's investment in LLCB II is accounted for using the equity method of accounting.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Equity in Investments (continued)
The following is financial information of the equity method investees for fiscal years 2025, 2024 and 2023 (in thousands):
2025 Del Mar1 Romney Rosales LLCB LLCB II
Non-current assets $ 596 $ 2,102 $ — $ —
Non-current liabilities $ — $ 288 $ — $ —
Non-current liabilities $ — $ — $ 650 $ — $ —
1 The 2025 Del Mar revenues, operating income and net income are for the period November 1, 2024 through August 3, 2025.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Equity in Investments (continued)
The Company’s investment and equity in earnings (losses) of the equity method investees are as follows (in thousands):
Del Mar Romney Rosales LLCB LLCB II Total
Cash distributions (220) — — — — (220)
Cash contributions — — — — 525 525
Capitalized interest — — — — 322 322
Foreign currency adjustments — — 12 — — 12
Cash contributions — — — — 480 480
Capitalized interest — — — — 213 213
Fair value of loan guarantee — — — (1,080) — (1,080)
Foreign currency adjustments — — (86) — — (86)
Capitalized interest — — — — 441 441
Foreign currency adjustments — — 39 — — 39
8. Goodwill and Intangible Assets
A summary of the change in the carrying amount of goodwill is as follows (in thousands):
Goodwill Carrying Amount
Foreign currency translation adjustment (8)
Foreign currency translation adjustment 2
Goodwill is tested for impairment on an annual basis or when an event or changes in circumstances indicate that its carrying value may not be recoverable. The Company concluded that no potential impairment indicators existed during any interim period and performed its annual assessment of goodwill impairment as of July 31, 2025 with no impairment noted. The Company did not incur any goodwill impairment losses for fiscal years 2025, 2024 or 2023, as the estimated fair values of its reporting units were in excess of their carrying values.
As of October 31, 2025, the Company allocated goodwill to its reportable segments as follows: Fresh Lemons $936,000 and Lemon Packing $570,000, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)