Calavo Growers, Inc. (NASDAQ:CVGW), a global leader in the processing and distribution of avocados, tomatoes, papayas, and guacamole, stock surges 13.98% (As on September 10, 11:27:48 AM UTC-4, Source: Google Finance) after the company posted higher than expected results for the third quarter of FY 24. Grown segment sales increased 13.3%, and Prepared segment sales decreased 2.4%. The average selling price of avocados in the Grown segment increased by 25% compared to the prior year. Gross profit for the third quarter was $20.1 million, or 11.2% of net sales, compared to $22.0 million and 13.7%, respectively, for the same period last year. Adjusted net income was $10.2 million compared to adjusted net income of $7.7 million, last year. Adjusted EBITDA was $13.5 million compared to $13.0 million for the same period last year. The Company ended the quarter with $39.0 million of net debt, which included $33.5 million of borrowings under its credit facility and $6.6 million of other long-term obligations and finance leases, less cash and cash equivalents of $1.1 million. The Company reduced its net debt by $9.5 million and had approximately $57.3 million of liquidity as of July 31, 2024. Subsequent to quarter end, the company retired the remaining debt balance with proceeds from the sale of the Fresh Cut business.

Further, Avocado prices increased by 25% compared to the third quarter last year while avocado margins improved, which helped to offset an avocado volume decline of 4.5%. The company expects sequential improvement in the Prepared business in the fiscal fourth quarter as compared to the third quarter.

Meanwhile, on August 15, 2024, the Company closed the sale of its Fresh Cut business for $83.0 million, subject to various closing adjustments. The company determined that it was more likely than not that the fair value was less than the carrying amount of net assets as of July 31, 2024. Inclusive of the projected impacts of transaction costs, certain retained liabilities, and taxes, the Company estimated after-tax net cash proceeds from the sale to approximate $75.0 million.

CVGW in the third quarter of FY 24 has reported the adjusted earnings per share of 57 cents, beating the analysts’ estimates for the adjusted earnings per share of 36 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 11.7 percent to $179.6 million in the third quarter of FY 24, beating the analysts’ estimates for revenue by 2.63%.