Calavo Growers, Inc. Reports Highest Quarterly Revenues in Company History for the Three Months Ended July 31, 2007

Business Wire, Sept 5, 2007

Financial Highlights Include:

* Record Third-Quarter Revenues Reach $91.3 Million, a 16% Increase From Prior Year -- Best for Any Three-Month Period in Company History

* Company Records Continued Substantial Profits in Third Quarter

* Nine-Month Results Show Robust Strength Across the Board with New Highs in Sales, Gross Margin, Operating Income, Net Income and Earnings Per Share

* Nine-Months' Earnings Per Share Jump 39% from the Corresponding Period of Fiscal 2006

* Sales of Processed Products Advance 16% in the Most Recent Quarter

* Year-to-Date Revenues Climb to a Record $217.7 Million, an 11% Increase from Fiscal 2006

SANTA PAULA, Calif. -- Calavo Growers, Inc. (Nasdaq:CVGW) announced today that revenues for the third quarter ended July 31, 2007 reached the highest level for any three-month period in company history. Third quarter revenues totaled $91.3 million, up $12.4 million, or 16%, from $78.9 million in the corresponding quarter of fiscal 2006, fueled by double-digit sales percentage gains in both fresh and processed avocado operations. Net income was $2.2 million, equal to $0.16 basic and $0.15 diluted earnings per share, in the three months ended July 31, 2007. The company reported earnings of $2.9 million, or $0.20 basic and diluted earnings per share, in the like period of fiscal 2006.

Earnings for the period, while substantial, trailed the year-earlier total due to the unusually high cost of Mexican avocados used in the processing operation. The high cost was primarily the result of shipping delays of Chilean avocados to the U.S. due to the freeze in Chile in July. The cost of Mexican avocados has since decreased significantly.

The company, a global leader in the packing and marketing of fresh and processed avocados and other perishable food products, reported nine-month results that set new record highs across the board including sales, gross margin, operating income, net income and earnings per share. Net income for the nine months advanced 38% on an 11% sales increase.

Revenues for the first nine months of fiscal 2007 increased $20.8 million to $217.7 million from $196.9 million, from the corresponding period one year ago. Net income for the period climbed $1.7 million to $6.1 million from $4.4 million in the previous year. Year-to-date basic and diluted earnings per share advanced 39%, to $0.43, versus $0.31 per basic and diluted share in the initial nine months of fiscal 2006.

Nine-month gross margin totaled $24.7 million, an increase of 13% from $21.9 million last year. Operating income for the period rose 41% to $10.5 million from $7.5 million.

Lee E. Cole, chairman, president and CEO, commented: "With our all-time best sales quarter, Calavo continues to demonstrate that we have created a formidable engine for growth, propelled by multiple sales platforms to offset seasonality, adverse weather and other market conditions. I believe the third quarter would have produced record results had it not been for the effect on processed product earnings caused by the Chilean shipping delays noted above.

"Our fresh operations achieved sales growth of 16% in the quarter, driven by a highly favorable pricing environment for avocados. Drawing on international sources, we registered this increase despite a cyclically smaller California avocado crop, which was further impacted by the severe frosts of last January. Consumer demand for avocados, both fresh and processed, continues to expand briskly, reflecting growing awareness of their taste appeal, nutritional benefits and ability to enhance a vast array of recipes and menu items.

"As to the processed segment, quarterly sales growth of 16% primarily reflected expanding interest by both retail and foodservice operators. Our second high-pressure machine is now operational and is assisting us in meeting customer demand.

"Our management team not only focuses on implementing our growth initiatives, but also is keenly aware of the vital importance of enhancing operating efficiencies and rigorously containing costs. This vigilance has certainly paid off for us this year, generating substantial bottom-line benefits."

Selling, general and administrative expenses for the quarter were $4.8 million, a decrease of $338,000, or 6.6%, from $5.1 million one year ago. As a percentage of total revenue, SG&A was 5.3% in the most recent quarter, a decrease of 120 basis points from 6.5%. For the year-to-date period, SG&A has been reduced by $297,000 while supporting nearly $21 million in sales growth.

Referencing the Company's strong financial condition, Cole stated that Calavo's balance sheet is highly flexible and possesses considerable capacity for leverage. At July 31, 2007, total assets equaled $144.7 million, up from $107.5 million at October 31, 2006.

As recently announced, the company has entered into a significant new agreement to introduce Calavo-brand tomatoes to the market. The new initiative, which will further enhance Calavo's diversified fresh products business, could add $20-$25 million to revenues in fiscal 2008, according to company estimates.