0001558370-24-000671 | 10-K | XBRL Viewer

Long-Term Obligations - Summary (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Long-Term Obligations
Finance leases	$ 7,251	$ 6,021
Less current portion	(1,604)	(1,574)
Finance lease liability, noncurrent	$ 5,647	$ 4,447

Segment Information

12 Months Ended

Oct. 31, 2023

Segment Information

Segment Information

10. Segment Information

Calavo operates in two segments, Grown and Prepared. The Grown segment consists of fresh avocados, tomatoes and papayas. The Prepared segment comprises all other products including fresh-cut fruits and vegetables, ready-to-eat sandwiches, wraps, salads and snacks, and guacamole sold at retail and food service as well as avocado pulp sold to foodservice.

These two business segments are presented based on how information is used by our Chief Executive Officer (our Chief Operating Decision Maker) to measure performance and allocate resources. Selling, general and administrative expenses, as well as other non-operating income/expense items, are evaluated by our Chief Executive Officer in the aggregate. We do not allocate assets, or specifically identify them, to our operating segments. Prior year information has been recast to conform with the new segment disclosures.

The following table sets forth sales, cost of sales, and gross profit by segment (in thousands)


					Intersegment
	Grown		Prepared		Elimins.		Total

	(All amounts are presented in thousands)
Year ended October 31, 2023
Net sales	$	529,025	$	444,552	$	(1,629)	$	971,948
Cost of sales		476,862		426,759		(1,629)		901,992
Gross profit	$	52,163	$	17,793	$	—	$	69,956

Year ended October 31, 2022
Net sales	$	700,270	$	492,868	$	(2,065)	$	1,191,073
Cost of sales		650,105		469,188		(2,065)		1,117,228
Gross profit	$	50,165	$	23,680	$	—	$	73,845

For fiscal year 2023, 2022 and 2021, intersegment sales and cost of sales of $1.6 million, $2.1 million and $2.5 million, respectively, between Grown and Prepared were eliminated.

The following table sets forth sales by product category, by segment (in thousands):


	Year ended October 31, 2023						Year ended October 31, 2022

	Grown		Prepared		Total		Grown		Prepared		Total

Avocados	$	466,385	$	—	$	466,385	$	645,944	$	—	$	645,944
Tomatoes		56,298		—		56,298		47,288		—		47,288
Papayas		10,432		—		10,432		11,422		—		11,422
Other fresh income		100		—		100		123		—		123
Fresh-cut products		—		383,028		383,028		—		426,161		426,161
Guacamole		—		70,611		70,611		—		74,970		74,970
Salsa		—		796		796		—		1,860		1,860
Total gross sales		533,215		454,435		987,650		704,777		502,991		1,207,768
Less sales allowances		(4,190)		(9,883)		(14,073)		(4,507)		(10,123)		(14,630)
Less intersegment eliminations		(1,629)		—		(1,629)		(2,065)		—		(2,065)
Net sales	$	527,396	$	444,552	$	971,948	$	698,205	$	492,868	$	1,191,073


	Year ended October 31, 2022						Year ended October 31, 2021

	Grown		Prepared		Total		Grown		Prepared		Total

Avocados	$	645,944	$	—	$	645,944	$	536,969	$	—	$	536,969
Tomatoes		47,288		—		47,288		43,658		—		43,658
Papayas		11,422		—		11,422		10,884		—		10,884
Other fresh income		123		—		123		693		—		693
Fresh-cut products		—		426,161		426,161		—		403,017		403,017
Guacamole		—		74,970		74,970		—		75,681		75,681
Salsa		—		1,860		1,860		—		2,784		2,784
Total gross sales		704,777		502,991		1,207,768		592,204		481,482		1,073,686
Less sales allowances		(4,507)		(10,123)		(14,630)		(3,677)		(11,682)		(15,359)
Less intersegment eliminations		(2,065)		—		(2,065)		(2,497)		—		(2,497)
Net sales	$	698,205	$	492,868	$	1,191,073	$	586,030	$	469,800	$	1,055,830

Sales to customers outside the U.S. were approximately $34.6 million, $27.8 million and $34.8 million for fiscal years 2023, 2022, and 2021, respectively.

Prepared segment sales included sales to two customers who represented more than 10% of total consolidated revenues for fiscal 2023. Prepared segment sales included sales to one customer who represented more than 10% of total consolidated revenues for fiscal 2022 and 2021. Additionally, the Grown products segment had sales to one customer that represented more than 10% of total consolidated revenues for fiscal 2021.

Our goodwill balance of $28.7 million is attributed by segment to Grown for $4.0 million and Prepared for $24.7 million as of October 31, 2023 and 2022, respectively.

Long-lived assets attributed to geographic areas as of October 31, are as follows (in thousands):


	United States		Mexico		Consolidated
October 31, 2023	$	77,791	$	34,938	$	112,729
October 31, 2022	$	77,208	$	36,102	$	113,310

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Stock-Based Compensation - Fair Value Input (Details) - Employee Stock Option [Member] - Chief Executive Officer	1 Months Ended
	Mar. 31, 2023
Risk-free interest rate	4.31%
Expected volatility	35.00%
Dividend yield	1.60%
Expected life (years)	3 years

Stock-Based Compensation - Stock Option (Details) $ / shares in Units, $ in Thousands	1 Months Ended	12 Months Ended
	Mar. 31, 2023 USD ($) D $ / shares shares	Oct. 31, 2023 USD ($) $ / shares shares	Oct. 31, 2022 USD ($) $ / shares shares	Oct. 31, 2021 USD ($)
Share-based Compensation
Outstanding, Number of Shares, Beginning Balance		27,000
Exercised, Number of Shares		(2,000)
Granted, Number of Shares		500,000
Outstanding, Number of Shares, Ending Balance		525,000	27,000
Exercisable, Number of Shares		17,000
Outstanding, Weighted-Average Exercise Price \| $ / shares		$ 44.67
Exercised, Weighted-Average Exercise Price \| $ / shares		23.48
Granted, Weighted-Average Exercise Price \| $ / shares		24.39
Outstanding, Weighted-Average Exercise Price, ending balance \| $ / shares		25.44	$ 44.67
Exercisable, Weighted-Average Exercise Price \| $ / shares		$ 49.52
Outstanding, Aggregate Intrinsic Value \| $		$ 475
Stock-based compensation expense \| $		5,200	$ 3,100	$ 4,000
Chief Executive Officer
Share-based Compensation
Granted, Number of Shares	500,000
Outstanding, Aggregate Intrinsic Value \| $	$ 1,800
Chief Executive Officer \| Tranche One
Share-based Compensation
Granted, Number of Shares	200,000
Chief Executive Officer \| Tranche Two
Share-based Compensation
Threshold trading days \| D	30
Granted, Number of Shares	100,000
Chief Executive Officer \| Tranche Two \| Minimum
Share-based Compensation
Target share price \| $ / shares	$ 50.00
Chief Executive Officer \| Tranche Three
Share-based Compensation
Threshold trading days \| D	30
Granted, Number of Shares	100,000
Chief Executive Officer \| Tranche Three \| Minimum
Share-based Compensation
Target share price \| $ / shares	$ 60.00
Chief Executive Officer \| Tranche Four
Share-based Compensation
Threshold trading days \| D	30
Granted, Number of Shares	100,000
Chief Executive Officer \| Tranche Four \| Minimum
Share-based Compensation
Target share price \| $ / shares	$ 70.00
Employee Stock Option [Member]
Share-based Compensation
Stock-based compensation expense \| $		1,300
Unrecognized stock based compensation expenses \| $		$ 700
Unrecognized compensation cost period		4 months 24 days
Employee Stock Option [Member] \| Minimum
Share-based Compensation
Vesting period		1 year
Award expiration period		2 years
Employee Stock Option [Member] \| Maximum
Share-based Compensation
Vesting period		5 years
Award expiration period		5 years

Basis of Presentation and Significant Accounting Policies - EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Basis of Presentation and Significant Accounting Policies
Net loss attributable to Calavo Growers, Inc.	$ (8,344)	$ (6,249)	$ (11,818)
Weighted average shares - Basic (in shares)	17,750,000	17,663,000	17,621,000
Weighted average shares - Diluted (in shares)	17,750,000	17,663,000	17,621,000
Net loss - Basic (in dollars per shares)	$ (0.47)	$ (0.35)	$ (0.67)
Net loss - Diluted (in dollars per shares)	$ (0.47)	$ (0.35)	$ (0.67)
Antidilutive shares excluded from EPS (in shares)	104,000	82,000	42,000

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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- Definition

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+ Details

Basis of Presentation and Significant Accounting Policies - Revenue and Receivables (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Products
Allowances of accounts receivable	$ 5,245	$ 4,199
Bridge loan to Agricola Belher		$ 1,700
Top Ten Customers \| Customer concentration [Member] \| Sales revenue [Member]
Products
Concentration of risk (as a percent)	66.00%	59.00%	58.00%
Kroger \| Customer concentration [Member] \| Sales revenue [Member]
Products
Concentration of risk (as a percent)	17.00%	15.00%	16.00%
Trader Joes \| Customer concentration [Member] \| Sales revenue [Member]
Products
Concentration of risk (as a percent)	13.00%	11.00%
Walmart \| Customer concentration [Member] \| Sales revenue [Member]
Products
Concentration of risk (as a percent)	9.00%	10.00%	11.00%

Commitments and Contingencies (Details) $ in Thousands, $ in Millions				12 Months Ended
	Oct. 10, 2022 MXN ($)	Aug. 18, 2021	Jul. 31, 2018 MXN ($)	Oct. 31, 2023 USD ($)	Oct. 31, 2022 USD ($)	Oct. 31, 2021 USD ($)	Oct. 31, 2023 MXN ($)	Jan. 31, 2023 MXN ($)	Jul. 31, 2021 USD ($)	Jun. 25, 2021 USD ($)
Commitments And Contingencies [Line Items]
Settlement related fees				$ 3,128	$ 1,417	$ 1,797
Tax dispute liability accrued				1,100				$ 18.0
Mexican Tax Authority \| Tax Assessment 2013
Commitments And Contingencies [Line Items]
Tax assessment	$ 3,100.0
Settlement related fees				2,400
Fixed assets net book value under lien										$ 26,000
Amount disputed			$ 2,600.0	143,800
Bank accounts under lien										$ 1,000
Percentage of tax on fruit purchase deposits		16.00%
Tax dispute liability accrued									$ 11,000
Estimate of loss				166,000			$ 3,000.0
Mexican Tax Authority \| Tax Assessment 2013 \| Employee Profit Sharing Liability
Commitments And Contingencies [Line Items]
Estimate of loss				$ 6,500			$ 118.0

Mexican IVA taxes receivable

12 Months Ended

Oct. 31, 2023

Mexican IVA taxes receivable

Mexican IVA taxes receivable

14. Mexican IVA taxes receivable

Included in other assets are tax receivables due from the Mexican government for value-added taxes (IVA) paid in advance. CDM is charged IVA by vendors on certain expenditures in Mexico, which, insofar as they relate to the exportation of goods, translate into IVA amounts receivable from the Mexican government.

As of October 31, 2023, and October 31, 2022, CDM IVA receivables totaled $49.9 million (913.6 million Mexican pesos) and $43.6 million (865.4 million Mexican pesos). Historically, CDM received IVA refund payments from the Mexican tax authorities on a timely basis. Beginning in fiscal 2014 and continuing into fiscal 2021, however, the tax authorities began carrying out more detailed reviews of our refund requests and our supporting documentation. Additionally, they are also questioning the refunds requested attributable to IVA paid to certain suppliers that allegedly did not fulfill their own tax obligations. We believe these factors, and others, have contributed to delays in the processing of IVA claims by the Mexican tax authorities. Currently, we are in the process of collecting such balances, primarily through regular administrative processes, but these amounts may ultimately need to be recovered through Administrative Appeals and/or legal means.

During the first quarter of fiscal 2017, the tax authorities informed us that their internal opinion, based on the information provided by the local SAT office, considers that CDM is not properly documented relative to its declared tax structure and therefore CDM cannot claim the refundable IVA balance. CDM has strong arguments and supporting documentation to sustain its declared tax structure for IVA and income tax purposes. CDM started an Administrative Appeal for the IVA related to the request of the months of July, August and September of 2015 (the “2015 Appeal”) in order to assert its argument that CDM is properly documented and to therefore change the SAT’s internal assessment. In August 2018, we received a favorable ruling from the SAT’s Legal Administration in Michoacan on the 2015 Appeal indicating that they believe CDM’s legal interpretation of its declared tax structure is indeed accurate. While favorable on this central matter of CDM’s declared tax structure, the ruling, however, still does not recognize the taxpayers right to a full refund for the IVA related to the months of July, August and September 2015. Therefore, in October 2018, CDM filed a substance-over-form Annulment Suit in the Federal Tax Court to recover its full refund for IVA over the subject period, which is currently pending resolution.

In April 2022, the Tax Court issued the ruling for the months of July, August and September 2015 through which it was declared that the following resolutions were resolved:

●

It is recognized that CDM operates as a maquila under the authorization of the Ministry of Finance.

●

It is recognized that all bank deposits corresponding to the purchase of avocados on behalf of Calavo Growers Inc. (CGI), are subject to the maquila program and it is not accruable income for purposes of income tax nor activities subject to VAT.

●

It is recognized that IVA is recoverable, since CDM demonstrated the existence of operations carried under the maquila services.

●

Resolved that certain IVA amounts attributed to the purchase of certain packing materials are not recoverable as CDM was not the buyer on record and therefore did not pay for the materials, which approximated $6.9 million pesos (approximately $0.4 million USD).

In January 2023, the Federal Tax Court issued a definitive resolution confirming the ruling from April 2022, ordering SAT to refund approximately $18 million pesos (approx. $1.1 million USD at October 31, 2023) and confirming that the $6.9 million pesos (approx. $0.4 million USD at October 31, 2023) related to packing materials will not be recoverable. For the year ended October 31, 2023, we recognized a reserve of $1.4 million USD for Mexican IVA tax receivables related to certain packing material vendors corresponding to the years 2013 and 2015. This reserve includes the amounts included in the January 2023 ruling as well as other similar receivables that are subject to proceedings in this same Federal Tax Court.

In June 2023, we received $2.8 million from the SAT related to Mexican IVA tax receivables corresponding to fiscal year 2013, which was consistent with the January 2023 definitive resolution. Of this amount, $1.7 million was interest and inflation related adjustments. This $1.7 million was netted with expenses related to Mexican tax matters on the statement of operations.

Various cases from IVA periods in April, June and August 2017 were issued negative resolutions and the deadline to challenge the resolutions has elapsed. The cases can still be pursued but must be re-initiated providing new evidence. Although the likelihood of success is still relatively high, the requirement to re-initiate has reduced the likelihood of recovery and therefore the Company has reserved $1.1 million as of October 2023.

We believe that our operations in Mexico are properly documented, and our internationally recognized tax advisors believe that there are legal grounds to prevail in collecting the corresponding IVA amounts. With assistance from our internationally recognized tax advisory firm, as of October 31, 2023, CDM has filed Administrative Appeals for months for which IVA refunds have been denied by the SAT, and will continue filing such appeals for any months for which refunds are denied in the future. Therefore, it is probable that the Mexican tax authorities will ultimately authorize the refund of the remaining IVA amounts.

Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021	Oct. 31, 2020
Leases
Operating lease liability	$ 52,455
Other long-term liabilities	4,653	$ 2,635
Total shareholders' equity	210,229	223,371	$ 226,883	$ 256,002
Lease-related assets and liabilities
Operating lease assets	48,033	54,518
Finance lease asset	$ 6,777	$ 5,721
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Property, Plant, and Equipment and Finance Lease Right-of-Use Asset, after Accumulated Depreciation and Amortization	Property, Plant, and Equipment and Finance Lease Right-of-Use Asset, after Accumulated Depreciation and Amortization
Total	$ 54,810	$ 60,239
Current portion of operating leases	7,062	6,925
Finance lease liability, current	1,604	1,574
Long-term portion of operating leases	45,393	52,140
Finance lease liability, noncurrent	5,647	4,447
Total	$ 59,706	$ 65,086
Weighted-average remaining lease term: Operating leases	8 years 2 months 12 days	9 years 3 months 18 days
Weighted-average remaining lease term: Finance leases	6 years 6 months	6 years 10 months 24 days
Weighted-average discount rate: Operating leases	3.10%	2.87%
Weighted-average discount rate: Finance leases	4.83%	3.62%

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
CONSOLIDATED BALANCE SHEETS
Allowances of accounts receivable	$ 5,245	$ 4,199
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000	100,000
Common stock, shares issued	17,761	17,732
Common stock, shares outstanding	17,761	17,732

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	$ 971,948	$ 1,191,073	$ 1,055,830
Cost of sales	901,992	1,117,228	998,405
Gross profit	69,956	73,845	57,425
Selling, general and administrative	66,400	65,482	56,463
Expenses related to Mexican tax matters	3,128	1,417	1,797
Impairment and charges related to Florida facility closure		959	9,162
Operating income	428	5,987	(9,997)
Interest income	605	500	335
Interest expense	(2,495)	(1,686)	(798)
Other income, net	316	1,017	1,016
Recovery on reserve for FreshRealm note receivable and impairment of investment			6,130
Unrealized net income (loss) on Limoneira shares		(8,605)	3,858
Income (loss) before income taxes and loss from unconsolidated entities	(1,146)	(2,787)	544
Income tax expense	(5,942)	(3,251)	(10,747)
Net loss from unconsolidated entities	(879)	(564)	(1,719)
Net loss	(7,967)	(6,602)	(11,922)
Add: Net loss (income) attributable to noncontrolling interest	(377)	353	104
Net loss attributable to Calavo Growers, Inc.	$ (8,344)	$ (6,249)	$ (11,818)
Calavo Growers, Inc.'s net loss per share:
Basic (in dollars per shares)	$ (0.47)	$ (0.35)	$ (0.67)
Diluted (in dollars per shares)	$ (0.47)	$ (0.35)	$ (0.67)
Number of shares used in per share computation:
Basic	17,750	17,663	17,621
Diluted	17,750	17,663	17,621

Segment Information - Product (Details) $ in Thousands	12 Months Ended
Segment Information - Product (Details) $ in Thousands	Oct. 31, 2023 USD ($) segment	Oct. 31, 2022 USD ($)	Oct. 31, 2021 USD ($)
Segment reporting information
Number of reportable segments \| segment	2
Net sales	$ 971,948	$ 1,191,073	$ 1,055,830
Goodwill	28,653	28,653
Grown
Segment reporting information
Net sales	527,396	698,205	586,030
Goodwill	4,000	4,000
Prepared
Segment reporting information
Net sales	444,552	492,868	469,800
Goodwill	24,700	24,700
Operating segments
Segment reporting information
Total gross sales	987,650	1,207,768	1,073,686
Less sales allowances	(14,073)	(14,630)	(15,359)
Operating segments \| Avocados
Segment reporting information
Total gross sales	466,385	645,944	536,969
Operating segments \| Tomatoes
Segment reporting information
Total gross sales	56,298	47,288	43,658
Operating segments \| Papayas
Segment reporting information
Total gross sales	10,432	11,422	10,884
Operating segments \| Other fresh income
Segment reporting information
Total gross sales	100	123	693
Operating segments \| Fresh-cut fruit
Segment reporting information
Total gross sales	383,028	426,161	403,017
Operating segments \| Guacamole
Segment reporting information
Total gross sales	70,611	74,970	75,681
Operating segments \| Salsa
Segment reporting information
Total gross sales	796	1,860	2,784
Operating segments \| Grown
Segment reporting information
Total gross sales	533,215	704,777	592,204
Less sales allowances	(4,190)	(4,507)	(3,677)
Net sales	529,025	700,270
Operating segments \| Grown \| Avocados
Segment reporting information
Total gross sales	466,385	645,944	536,969
Operating segments \| Grown \| Tomatoes
Segment reporting information
Total gross sales	56,298	47,288	43,658
Operating segments \| Grown \| Papayas
Segment reporting information
Total gross sales	10,432	11,422	10,884
Operating segments \| Grown \| Other fresh income
Segment reporting information
Total gross sales	100	123	693
Operating segments \| Prepared
Segment reporting information
Total gross sales	454,435	502,991	481,482
Less sales allowances	(9,883)	(10,123)	(11,682)
Net sales	444,552	492,868
Operating segments \| Prepared \| Fresh-cut fruit
Segment reporting information
Total gross sales	383,028	426,161	403,017
Operating segments \| Prepared \| Guacamole
Segment reporting information
Total gross sales	70,611	74,970	75,681
Operating segments \| Prepared \| Salsa
Segment reporting information
Total gross sales	796	1,860	2,784
Intersegment Eliminations
Segment reporting information
Net sales	(1,629)	(2,065)	(2,497)
Intersegment Eliminations \| Grown
Segment reporting information
Net sales	(1,629)	(2,065)	(2,497)
Intersegment Eliminations \| Prepared
Segment reporting information
Net sales	$ 0	$ 0	$ 0

Commitments and Contingencies

12 Months Ended

Oct. 31, 2023

Commitments and Contingencies.

Commitments and Contingencies

7. Commitments and Contingencies

Commitments and guarantees

We lease facilities and certain equipment under non-cancelable leases expiring at various dates through 2031. We are committed to make minimum cash payments under these agreements as of October 31, 2022. See Note 15 for additional details on the type of lease agreements.

We indemnify our directors and have the power to indemnify each of our officers, employees and other agents, to the maximum extent permitted by applicable law. No amounts have been accrued in the accompanying financial statements related to these indemnifications.

Compliance matters

On January 16, 2024, the Company announced that its internal audit process had identified to the Audit Committee of the Board of Directors certain matters that the Board of Directors determined after fiscal year end merited enhanced evaluation. A Special Committee of the Board of Directors (the “Special Committee”) was established to commence an investigation, with the assistance of external legal counsel and external forensic accountants. The Special Committee determined that certain of those matters related to the Company’s operations in Mexico raised potential issues under the Foreign Corrupt Practices Act (“FCPA”). The Company has voluntarily disclosed this ongoing internal investigation to the SEC and the Department of Justice ("DOJ"), and the Company intends to fully cooperate with the SEC and the DOJ in connection with these matters. Any determination that the Company’s operations or activities were not in compliance

with laws, including the FCPA, could result in the imposition of material fines and penalties and the imposition of equitable remedies. The Company cannot currently predict the timing of completion or the outcome of its internal investigation or of any actions that may be taken by the SEC, the DOJ or Mexican authorities in connection with the matters under investigation, and the Company cannot currently estimate the amount or range of loss or potential impact on its consolidated financial statements associated with these matters.

Mexico tax audits

We conduct business both domestically and internationally and, as a result, one or more of our subsidiaries files income tax returns in U.S. federal, U.S. state and certain foreign jurisdictions. Accordingly, in the normal course of business, we are subject to examination by taxing authorities, primarily in Mexico and the United States.

2013 Assessment

In January 2017, we received preliminary observations from the Servicio de Administracion Tributaria in Mexico (the “SAT”) related to an audit for fiscal year 2013 outlining certain proposed adjustments primarily related to intercompany funding, deductions for services from certain vendors/suppliers and IVA. We provided a written rebuttal to these preliminary observations during our second fiscal quarter of 2017. During the period from our third fiscal quarter of 2017 through our third fiscal quarter of 2018, we attempted to resolve our case with the SAT through the conclusive agreement submitted before PRODECON (Mexican Tax Ombudsman), having several working meetings attended by representatives of the SAT, Calavo de Mexico (“CDM”) and the PRODECON. However, we were unable to materially resolve our case with the SAT through the PRODECON process.

As a result, in July 2018, the SAT’s local office in Uruapan issued to CDM a final tax assessment (the “2013 Assessment”) totaling approximately $2.6 billion Mexican pesos (which includes annual adjustments for inflation, and equals approximately $143.8 million USD at October 31, 2023) related to income tax, flat rate business tax, and value added tax, related to this fiscal 2013 tax audit. This amount has been adjusted for inflation as of October 31, 2023 to the amount of $3 billion Mexican pesos (approximately $166.0 million USD). Additionally, the tax authorities have determined that we owe our employees profit-sharing liability, totaling approximately $118 million Mexican pesos (approximately $6.5 million USD at October 31, 2023). In August 2018, we filed an Administrative Appeal on the 2013 Assessment, appealing our case to the SAT’s central legal department in Michoacan.

On June 25, 2021, we became aware that the Administrative Appeal had been resolved by the SAT against CDM on March 12, 2021, and that we had allegedly failed to timely respond to and challenge the SAT’s notification of such resolution, therefore rendering the 2013 Assessment as definitive. Consequently, the SAT placed liens on the fixed assets of CDM, with a net book value of approximately $26 million USD, and on bank accounts of CDM totaling approximately $1 million USD in order to guaranty the 2013 Assessment. Based on legal counsel from our tax advisory firm, we and our tax advisory firm have concluded that the March notification was not legally communicated.

On August 18, 2021, we filed an Administrative Reconsideration (the Reconsideration) before the Central Legal Department of the SAT located in Mexico City, asserting that the resolution in March of the Administrative Appeal was wrongly concluded, in particular with respect to the following matters:

o

Failure to recognize CDM as a “maquiladora”

o

Considering the Company to have a permanent establishment in Mexico,

o

Including fruit purchase deposits transferred by the Company to CDM as taxable,

o

Application of 16% IVA tax to fruit purchase deposits; and

o

Imposing double-taxation on the fruit purchase transactions

On August 20, 2021 we filed an Annulment Suit (the Annulment Suit) with the Federal Tax Court, which among other things, strongly contends that the notifications made by the SAT to CDM and its designated advisors of the resolution of the Administrative Appeal in March 2021 were not legally communicated. In addition, the Annulment Suit asserts the same matters central to the Reconsideration, as described above, as wrongly concluded in the resolution of the Administrative Appeal.

On September 22, 2021, we had an initial in-person meeting with the SAT in Mexico City to formally present and discuss the Reconsideration. The SAT agreed to review our Reconsideration in more detail; however, on January 3, 2022, the SAT formally rejected our request for the Reconsideration. In response to this rejection, on January 21, 2022, we filed a capital suit (the “Injunction Suit”) with a federal district court seeking to nullify the arguments against the Reconsideration made by the SAT on constitutional grounds.

The injunction Suit was to challenge the SAT’s response issued to the Reconsideration, and with that, to keep the Reconsideration alive until the Injunction Suit is decided. This would allow time to continue the discussions with SAT at the administrative level and would give SAT the legal basis to issue a new resolution. The Injunction Suit represents a further opportunity for a court to analyze this matter from a constitutional perspective.

On August 16, 2023, we received notice that the federal district court rejected the Injunction Suite. In so doing, the federal district court did not rule on the substance of the case, stating that the substance of the cse will be resolved by the Tax Court through the Annulment Suit. The Company filed an appeal with the federal circuit court on August 30, 2023.

On March 10, 2022, we met with the SAT and offered an Administrative Guaranty (Embargo en Via Administrativa) to secure the 2013 Assessment, which provides the SAT with certain administrative rights to CDM assets in the event we do not prevail in our actions through the Federal Tax Court.

On October 10, 2022, the Tax Court ruled in favor of CDM granting the definitive suspension, accepting the Administrative Guaranty and forcing the SAT to remove all liens placed on CDM fixed assets and bank accounts. These liens were removed in November 2022. The Court also recognized that the $3.1 billion pesos assessment exceeds the economic capacity of CDM.

On October 13, 2023, the company filed an extension of the Annulment Suit filed on August 20, 2021, as a result of the response to the lawsuit filed by the Tax Authority, pointing out that Tax Authority’s resolution is unlawful due to improper substantiation and motivation, because of the following:

• The QR Code does not allow the company to verify the veracity of the document,

• The notification of the tax assessment was not sent to the phone number indicated by the company, when the Tax Authority was obliged to do so, among others.

On November 14, 2023, the Tax Court notified the admission of the extension of the lawsuit was filed.

While we continue to believe that the 2013 Assessment is completely without merit, and that we will prevail on the Annulment Suit in the Tax Court, we also believe that it is in the best interest of CDM and the Company to settle the 2013 Assessment as quickly as possible. Furthermore, we believe that the above actions taken by CDM will encourage the SAT to agree to reach a settlement. In accordance with our cumulative probability analysis on uncertain tax positions, our settlements made by the SAT in other cases, the 2011 Assessment settlement reached by CDM with the MFM, and the value of CDM assets, we recorded a provision of $11 million in the third quarter of fiscal 2021, as a discrete item in Income Tax Provision. The provision includes estimated penalties, interest and inflationary adjustments. We believe that this provision remains appropriate as of October 31, 2023 based on our cumulative probability analysis. We incurred $2.4 million of related professional fees for the year ended October 31, 2023, which have been recorded in Expenses related to Mexican Tax matters on the consolidated statements of operations.

Litigation

From time to time, we are also involved in litigation arising in the ordinary course of our business that we do not believe will have a material adverse impact on our financial statements.

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Current assets:
Cash and cash equivalents	$ 2,091	$ 2,060
Restricted cash	761	1,074
Accounts receivable, net of allowances of $5,245 (2023) and $4,199 (2022)	61,376	59,016
Inventories	39,430	38,830
Prepaid expenses and other current assets	13,934	8,868
Advances to suppliers	14,684	12,430
Income taxes receivable	1,094	3,396
Total current assets	133,370	125,674
Property, plant, and equipment, net	112,729	113,310
Operating lease right-of-use assets	48,033	54,518
Investments in unconsolidated entities	2,902	3,782
Deferred income tax assets	3,010	5,433
Goodwill	28,653	28,653
Intangibles, net	5,698	7,206
Other assets	52,459	47,170
Total assets	386,854	385,746
Current liabilities:
Payable to growers	14,788	20,223
Trade accounts payable	15,537	10,436
Accrued expenses	31,108	51,795
Other current liabilities	11,000	11,000
Current portion of term loan	647
Current portion of operating leases	7,062	6,925
Current portion of long-term obligations and finance leases	1,604	1,574
Total current liabilities	81,746	101,953
Long-term liabilities:
Borrowings pursuant to line of credit, long-term	35,024	1,200
Long-term portion of term loan	3,416
Long-term portion of operating leases	45,393	52,140
Long-term portion of obligations and finance leases	5,647	4,447
Deferred income tax liabilities	746
Other long-term liabilities	4,653	2,635
Total long-term liabilities	94,879	60,422
Commitments and contingencies
Shareholders' equity:
Common stock ($0.001 par value, 100,000 shares authorized; 17,761 (2023) and 17,732 (2022) shares issued and outstanding)	18	18
Additional paid-in capital	176,481	171,223
Noncontrolling interest	1,392	1,015
Retained earnings	32,338	51,115
Total shareholders' equity	210,229	223,371
Total liabilities and shareholders' equity	$ 386,854	$ 385,746

Segment Information (Tables)

12 Months Ended

Oct. 31, 2023

Segment Information

Schedule of segment gross margin

The following table sets forth sales, cost of sales, and gross profit by segment (in thousands)


					Intersegment
	Grown		Prepared		Elimins.		Total

	(All amounts are presented in thousands)
Year ended October 31, 2023
Net sales	$	529,025	$	444,552	$	(1,629)	$	971,948
Cost of sales		476,862		426,759		(1,629)		901,992
Gross profit	$	52,163	$	17,793	$	—	$	69,956

Year ended October 31, 2022
Net sales	$	700,270	$	492,868	$	(2,065)	$	1,191,073
Cost of sales		650,105		469,188		(2,065)		1,117,228
Gross profit	$	50,165	$	23,680	$	—	$	73,845

Schedule of sales by product and segment

The following table sets forth sales by product category, by segment (in thousands):


	Year ended October 31, 2023						Year ended October 31, 2022

	Grown		Prepared		Total		Grown		Prepared		Total

Avocados	$	466,385	$	—	$	466,385	$	645,944	$	—	$	645,944
Tomatoes		56,298		—		56,298		47,288		—		47,288
Papayas		10,432		—		10,432		11,422		—		11,422
Other fresh income		100		—		100		123		—		123
Fresh-cut products		—		383,028		383,028		—		426,161		426,161
Guacamole		—		70,611		70,611		—		74,970		74,970
Salsa		—		796		796		—		1,860		1,860
Total gross sales		533,215		454,435		987,650		704,777		502,991		1,207,768
Less sales allowances		(4,190)		(9,883)		(14,073)		(4,507)		(10,123)		(14,630)
Less intersegment eliminations		(1,629)		—		(1,629)		(2,065)		—		(2,065)
Net sales	$	527,396	$	444,552	$	971,948	$	698,205	$	492,868	$	1,191,073


	Year ended October 31, 2022						Year ended October 31, 2021

	Grown		Prepared		Total		Grown		Prepared		Total

Avocados	$	645,944	$	—	$	645,944	$	536,969	$	—	$	536,969
Tomatoes		47,288		—		47,288		43,658		—		43,658
Papayas		11,422		—		11,422		10,884		—		10,884
Other fresh income		123		—		123		693		—		693
Fresh-cut products		—		426,161		426,161		—		403,017		403,017
Guacamole		—		74,970		74,970		—		75,681		75,681
Salsa		—		1,860		1,860		—		2,784		2,784
Total gross sales		704,777		502,991		1,207,768		592,204		481,482		1,073,686
Less sales allowances		(4,507)		(10,123)		(14,630)		(3,677)		(11,682)		(15,359)
Less intersegment eliminations		(2,065)		—		(2,065)		(2,497)		—		(2,497)
Net sales	$	698,205	$	492,868	$	1,191,073	$	586,030	$	469,800	$	1,055,830

Schedule of long-lived assets by geographic areas

Long-lived assets attributed to geographic areas as of October 31, are as follows (in thousands):


	United States		Mexico		Consolidated
October 31, 2023	$	77,791	$	34,938	$	112,729
October 31, 2022	$	77,208	$	36,102	$	113,310

Revolving Credit Facilities (Details) - USD ($) $ in Thousands		12 Months Ended
	Jun. 26, 2023	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Debt
Proceeds from revolving credit facilities		$ 256,912	$ 267,200	$ 334,850
Payments on revolving credit facilities		223,089	303,700	$ 317,700
Restricted cash		761	$ 1,074
Revolving Credit Facility, Previous
Debt
Payments on revolving credit facilities	$ 34,900
Weighted average interest rate (as a percent)			4.90%
Borrowings pursuant to line of credit, long-term			$ 1,200
Letters of credit outstanding			$ 3,200
New Credit Facility
Debt
Remaining credit available		$ 40,000
Weighted average interest rate (as a percent)		7.10%
Restricted cash		$ 800
Restricted investments		3,000
Revolving Loan
Debt
Credit available under borrowing agreement	90,000
Proceeds from revolving credit facilities	$ 36,800
Applicable margin (as a percent)	0.10%
Floor rate (as a percent)	0.00%
Fixed charge coverage ratio	10
Borrowings pursuant to line of credit, long-term		35,000
Revolving Loan \| Base Rate
Debt
Applicable margin (as a percent)	0.50%
Revolving Loan \| SOFR
Debt
Applicable margin (as a percent)	1.50%
Term Loan-Capex Credit Facility
Debt
Credit available under borrowing agreement	$ 10,000
Credit agreement term	1 year
Term loan, current and non-current		$ 4,100
Term Loan-Capex Credit Facility \| Base Rate
Debt
Applicable margin (as a percent)	1.00%
Term Loan-Capex Credit Facility \| SOFR
Debt
Applicable margin (as a percent)	2.00%

Description of the business

12 Months Ended

Oct. 31, 2023

Description of the business

Description of the business

1. Description of the business

Business

Calavo Growers, Inc. (referred to in this report as “Calavo”, the “Company”, “we’, “us” or “our”), is a global leader in the avocado industry and a provider of value-added fresh food. Our expertise in marketing and distributing avocados, prepared avocado products, and other perishable foods allows us to deliver a wide array of fresh and prepared food products to retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesalers on a worldwide basis. We procure avocados from California, Mexico and other growing regions around the world. Through our various operating facilities, we (i) sort, pack, and/or ripen avocados, tomatoes and/or Hawaiian grown papayas, (ii) create, process and package a portfolio of healthy fresh foods including fresh-cut fruit and vegetables, and prepared foods and (iii) process and package guacamole. We distribute our products both domestically and internationally and we report our operations in two different business segments: Grown and Prepared.

Long-Term Obligations (Tables)

12 Months Ended

Oct. 31, 2023

Long-Term Obligations

Schedule of long-term obligations

Long-term obligations at fiscal year ends consist of the following (in thousands):


	2023		2022
Finance leases		7,251		6,021
Less current portion		(1,604)		(1,574)
	$	5,647	$	4,447

Stock-Based Compensation (Tables)

12 Months Ended

Oct. 31, 2023

Stock-Based Compensation

Summary of restricted stock award activity

A summary of restricted stock activity, related to our 2011 Plan and 2020 Plan, is as follows (in thousands, except for per share amounts):


		Weighted-Average		Aggregate
	Number of Shares	Grant Price		Intrinsic Value
Outstanding at October 31, 2022	67	$	45.01
Granted	38	$	34.13
Vested	(72)	$	41.85
Forfeited	(4)	$	37.85
Outstanding at October 31, 2023	29	$	35.24	$	747

Summary of RSU activity

A combined summary of RSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts):


	Number of Shares	Weighted-Average		Aggregate
	Represented	Grant Price		Intrinsic Value
Outstanding at October 31, 2022	52	$	39.17
Granted	68	$	34.46
Vested	(32)	$	39.25
Forfeited	(37)	$	35.65
Outstanding at October 31, 2023	51	$	35.36	$	1,284

Summary of PRSU activity

The summary of PRSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts):


	Number of Shares	Weighted-Average		Aggregate
	Represented	Grant Price		Intrinsic Value
Outstanding at October 31, 2022	31	$	37.49
Granted	66	$	34.51
Vested	(14)	$	35.65
Forfeited	(33)	$	35.35
Adjusted for performance factor	(50)	$	35.22
Outstanding at October 31, 2023	—	$	—	$	—

Assumptions for fair value stock options


	March 2023
Risk-free interest rate	4.31	%
Expected volatility	35.0	%
Dividend yield	1.6	%
Expected life (years)	3.0

Summary of stock option activity


		Weighted-Average		Aggregate
		Exercise		Intrinsic
	Number of Shares	Price		Value
Outstanding at October 31, 2022	27	$	44.67
Exercised	(2)	$	23.48
Granted	500	$	24.39
Outstanding at October 31, 2023	525	$	25.44	$	475
Exercisable at October 31, 2023	17	$	49.52	$	—

Inventories

12 Months Ended

Oct. 31, 2023

Inventories

Inventories

3. Inventories

Inventories consist of the following (in thousands):


	October 31,		October 31,
	2023		2022

Fresh fruit	$	19,870	$	16,938
Packing supplies and ingredients		9,438		14,176
Finished prepared foods		10,122		7,716
Total	$	39,430	$	38,830

We assess the recoverability of inventories through an ongoing review of inventory levels in relation to sales and forecasts and product marketing plans. When the inventory on hand, at the time of the review, exceeds the foreseeable demand, the value of inventory that is not expected to be sold is written down. The amount of the write-down is the excess of historical cost over estimated realizable value. Once established, these write-downs are considered permanent adjustments to the cost basis of the excess inventory.

The assessment of the recoverability of inventories and the amounts of any write-downs are based on currently available information and assumptions about future demand and market conditions. Demand for processed avocado products may fluctuate significantly over time, and actual demand and market conditions may be more or less favorable than our projections. In the event that actual demand is lower than originally projected, additional inventory write-downs may be required.

Related-Party Transactions (Details) - USD ($) $ in Thousands	1 Months Ended					3 Months Ended		12 Months Ended
	Jul. 31, 2021	Oct. 31, 2020	Aug. 31, 2020	Aug. 31, 2018	Jul. 31, 2015	Apr. 30, 2021	Jan. 31, 2021	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021	Jan. 31, 2022
Related-Party Transactions
Dividend income from Limoneira								$ 0	$ 800	$ 600
Equity securities gain (loss)									(8,605)	3,858
Gross proceeds for common stock									18,450
Investments in unconsolidated entities								2,902	3,782
Advances to suppliers								1,326	4,677	1,632
Advances to suppliers								14,684	12,430
Non-cash settlement of advance								928	1,060
Don Memo \| Agricola Belher \| Don Memo
Related-Party Transactions
Ownership interest (as a percent)					50.00%
Directors
Related-Party Transactions
Purchases from related parties								2,700	7,500	17,800
Accounts payable to related parties								0	0
Chief Executive Officer
Related-Party Transactions
Purchases from related parties								3,100
Equity method investment-Don Memo
Related-Party Transactions
Purchases from related parties								15,800	13,700	14,700
Investment in FreshRealm					$ 2,000
Investments in unconsolidated entities								2,900	3,800	4,300
Amount loaned		$ 700				$ 600	$ 700
Advances to suppliers									2,800
Advances to suppliers								7,300	7,000	4,200
Loan receivable fixed interest rate (as a percent)		7.25%
Commitment amount		$ 2,400
Loan to related parties								1,600	1,600
Tomato liability due to related party								$ 1,500	1,900	3,000
Equity method investment-Don Memo \| Prepaid expenses and other current assets
Related-Party Transactions
Loan to related parties									400
Equity method investment-Don Memo \| Other long-term assets
Related-Party Transactions
Loan to related parties									1,200
Equity method investment-Don Memo \| Don Memo
Related-Party Transactions
Ownership interest (as a percent)								50.00%
Other related party \| Agricola Belher
Related-Party Transactions
Purchases from related parties								$ 16,200	19,400	16,300
Amount loaned	$ 3,500			$ 3,000
Advances to suppliers								5,400	4,500	4,500
Annual repayment of advances			$ 900	$ 600
Loan receivable fixed interest rate (as a percent)	10.00%		7.25%
Term of loans receivables			2 years
Expected payment on July 31, 2022											$ 900
Expected payment on July 31, 2023											900
Expected payment on July 31, 2024											$ 1,700
Non-cash settlement of advance								900	1,100
Other related party \| Agricola Belher \| LIBOR
Related-Party Transactions
Advances variable interest rate (as a percent)				10.00%
Other related party \| Agricola Belher \| Prepaid expenses and other current assets
Related-Party Transactions
Loan to related parties								1,700	900
Other related party \| Agricola Belher \| Other long-term assets
Related-Party Transactions
Loan to related parties									1,700
Subsidiary-Avocados de Jalisco
Related-Party Transactions
Purchases from related parties								$ 8,100	$ 7,000	$ 13,000
Subsidiary-Avocados de Jalisco \| Avocados de Jalisco
Related-Party Transactions
Subsidiary ownership (as a percent)								83.00%

Basis of Presentation and Significant Accounting Policies - Presentation (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Significant Accounting Policies
Restricted cash	$ 761	$ 1,074
Prepaid expenses and other current assets	13,934	$ 8,868
New Credit Facility
Significant Accounting Policies
Restricted cash	800
Prepaid expenses and other current assets	$ 3,000
Avocados de Jalisco \| Avocados de Jalisco
Significant Accounting Policies
Subsidiary ownership (as a percent)	83.00%

Basis of Presentation and Significant Accounting Policies (Tables)

12 Months Ended

Oct. 31, 2023

Basis of Presentation and Significant Accounting Policies

Schedule of Financial Statements of Consignment Arrangements


	2023		2022		2021

Sales	$	56,811	$	59,748	$	52,287
Cost of Sales		51,937		53,238		45,945
Gross Profit	$	4,874	$	6,510	$	6,342

Schedule of basic and diluted net income per share

Basic and diluted net loss per share is calculated as follows (U.S. dollars in thousands, except per share data):


	Year ended October 31,
	2023		2022		2021
Numerator:
Net loss attributable to Calavo Growers, Inc.	$	(8,344)	$	(6,249)	$	(11,818)
Denominator:
Weighted average shares - Basic		17,750		17,663		17,621
Effect on dilutive securities – Restricted stock/units/options (1)		—		—		—
Weighted average shares - Diluted		17,750		17,663		17,621
Net loss per share attributable to Calavo Growers, Inc:
Basic	$	(0.47)	$	(0.35)	$	(0.67)
Diluted	$	(0.47)	$	(0.35)	$	(0.67)

(1)

For the year ended October 31, 2023, 2022 and 2021, approximately 104,000 shares, 82,000 shares, and 42,000 shares of common stock equivalents were excluded in the computation of diluted net loss per share, respectively, as the effect would be anti-dilutive since the Company reported a net loss.

Schedule of reconciliation of shareholders' equity attributable to noncontrolling interest

The following tables reconcile shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands).


	Year ended		Year ended
Avocados de Jalisco noncontrolling interest	October 31, 2023		October 31, 2022

Noncontrolling interest, beginning	$	1,015	$	1,368
Net income (loss) attributable to noncontrolling interest of Avocados de Jalisco		377		(353)
Noncontrolling interest, ending	$	1,392	$	1,015

Basis of Presentation and Significant Accounting Policies - Consignments (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Sales	$ 971,948	$ 1,191,073	$ 1,055,830
Cost of sales	901,992	1,117,228	998,405
Gross profit	69,956	73,845	57,425
Consignment Arrangements [Member]
Sales	56,811	59,748	52,287
Cost of sales	51,937	53,238	45,945
Gross profit	$ 4,874	$ 6,510	$ 6,342

- Definition

Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

+ References

+ Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

Income Taxes - Unrecognized (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022
Reconciliation of gross unrecognized taxes
Beginning balance	$ 11,131	$ 11,303
Reductions based on tax positions related to prior periods		(172)
Gross increase - Tax positions in prior periods	0	0
Ending balance	11,131	$ 11,131
Accrued interest and penalties	$ 0

Basis of Presentation and Significant Accounting Policies - Infrastructure Advances (Details) - USD ($) $ in Thousands	1 Months Ended				3 Months Ended		12 Months Ended
	Jul. 31, 2021	Oct. 31, 2020	Aug. 31, 2020	Aug. 31, 2018	Apr. 30, 2021	Jan. 31, 2021	Oct. 31, 2023	Oct. 31, 2022	Jan. 31, 2022
Significant Accounting Policies
Non-cash settlement of advance							$ 928	$ 1,060
Equity method investment-Don Memo
Significant Accounting Policies
Commitment amount		$ 2,400
Loan receivable fixed interest rate (as a percent)		7.25%
Amount loaned		$ 700			$ 600	$ 700
Loan to related parties							1,600	1,600
Equity method investment-Don Memo \| Prepaid expenses and other current assets
Significant Accounting Policies
Loan to related parties								400
Equity method investment-Don Memo \| Other long-term assets
Significant Accounting Policies
Loan to related parties								1,200
Other related party \| Agricola Belher
Significant Accounting Policies
Loan receivable fixed interest rate (as a percent)	10.00%		7.25%
Amount loaned	$ 3,500			$ 3,000
Annual repayment of advances			$ 900	$ 600
Term of loans receivables			2 years
Non-cash settlement of advance							900	1,100
Expected payment on July 31, 2022									$ 900
Expected payment on July 31, 2023									900
Expected payment on July 31, 2024									$ 1,700
Other related party \| Agricola Belher \| Prepaid expenses and other current assets
Significant Accounting Policies
Loan to related parties							$ 1,700	900
Other related party \| Agricola Belher \| Other long-term assets
Significant Accounting Policies
Loan to related parties								$ 1,700
Other related party \| Agricola Belher \| LIBOR
Significant Accounting Policies
Advances variable interest rate (as a percent)				10.00%

Revolving Credit Facilities

12 Months Ended

Oct. 31, 2023

Revolving Credit Facilities

Revolving Credit Facilities

6. Revolving Credit Facilities

On June 26, 2023, Calavo and certain subsidiaries entered into a credit agreement (the “Credit Agreement”) by and among Calavo, certain subsidiaries of Calavo as guarantors, and Wells Fargo Bank, National Association, as agent and lender (“Agent”). The Credit Agreement provides for a revolving credit facility of up to $90.0 million (the “Revolving Loans”), along with a capex credit facility of up to $10.0 million (the “Term Loan”, and together with the Revolving Loans, the “New Credit Facility”).

The initial proceeds of $36.8 million on the Revolving Loans were used to fully repay the outstanding $34.9 million, balance under Calavo’s previous revolving credit facility with Bank of America, N.A. and to pay related transaction fees and expenses, and following the Closing Date (June 26, 2023) may be used for working capital and other general corporate purposes. For a period of one year following the Closing Date, Calavo may utilize the proceeds of the Term Loan to pay a certain percentage of the costs of certain equipment purchased by Calavo.

Borrowings of the Revolving Loans under the Credit Agreement are asset-based and are subject to a borrowing base calculation that includes a certain percentage of eligible accounts receivable, inventory and equipment of Calavo, less any reserves implemented by Agent in its permitted discretion; provided that the equipment based portion of such borrowing base calculation will reduce monthly following the Closing Date.

Borrowings under the Credit Agreement bear interest at a rate per annum equal to an applicable margin, plus, at Calavo’s option, either a base rate or a secured overnight financing rate (“SOFR”) term rate (which includes a spread adjustment of 0.10% and is subject to a floor of 0.00%). The applicable margin is (i) for Revolving Loans, 0.50% for base rate borrowings and 1.50% for SOFR term rate borrowings, and (ii) for Term Loan, 1.00% for base rate borrowings and 2.00% for SOFR term rate borrowings. The New Credit Facility matures on June 26, 2028 (the “Maturity Date”).

Calavo may voluntarily prepay loans under the New Credit Facility, in whole or in part, without premium or penalty. Subject to the terms and conditions set forth in the Credit Agreement, Calavo may be required to make certain mandatory prepayments prior to the Maturity Date.

The Credit Agreement contains negative covenants that, among other things, limit Calavo’s ability to: incur indebtedness; grant liens on its assets; enter into certain investments; consummate fundamental change transactions; engage in mergers or acquisitions or dispose of assets; enter into certain transactions with affiliates; make changes to its fiscal year; enter into certain restrictive agreements; and make certain restricted payments (including for dividends). Each of these limitations are subject to various conditions. The Credit Agreement also contains a springing fixed charge coverage ratio financial covenant that is tested if the amount of the Revolving Loans available for Calavo to borrow under the New Credit Facility is less than 10% of the total revolving credit facility.

The Credit Agreement also contains certain affirmative covenants and customary events of default provisions, including, subject to thresholds and grace periods, among others, payment default, covenant default, cross default to other material indebtedness, and judgment default.

As of October 31, 2023, we were in compliance with the financial covenants, and we expect to remain in compliance for the next 12-months from our issuance date. As of October 31, 2023, approximately $40.0 million was available for borrowing, based on our borrowing base calculation discussed above.

The weighted-average interest rate under the Credit Facility was 7.1% at October 31, 2023. Under the New Credit Facility, we had $35.0 million and $4.1 million outstanding related to the Revolving Loans and Term Loan, respectively, as of October 31, 2023. The future principal payments related to the Term Loan is approximately $0.6 million for fiscal year 2024, $0.7 million for fiscal year 2025, $0.7 million for fiscal year 2026, $0.7 million for fiscal year 2027, and $1.4 million for fiscal year 2028.

In connection with the New Credit Facility, we temporarily posted cash collateral to satisfy certain collateral requirements as we transitioned banks providing letters of credit related to our workers compensation policies. As of October 31, 2023, we have recorded $0.8 million and $3.0 million as restricted cash and prepaid and other current assets, respectively, related to this transition.

The weighted-average interest rate under our previous credit facility with Bank of America was 4.9% at October 31, 2022. Under this credit facility, we had $1.2 million outstanding as of October 31, 2022, and had standby letters-of-credit of $3.2 million as of October 31, 2022.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Segment Information - Geographic (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Segment reporting information
Net sales	$ 971,948	$ 1,191,073	$ 1,055,830
Long-lived assets	112,729	113,310
Outside United States
Segment reporting information
Net sales	34,600	27,800	$ 34,800
United States
Segment reporting information
Long-lived assets	77,791	77,208
Mexico
Segment reporting information
Long-lived assets	$ 34,938	$ 36,102

- Definition

+ References

+ Details

Basis of Presentation and Significant Accounting Policies - Advertising Expense (Details) - USD ($) $ in Millions	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Basis of Presentation and Significant Accounting Policies
Advertising costs	$ 0.4	$ 0.6	$ 0.4

Income Taxes - Provision (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Current:
Federal	$ (387)	$ 2,012	$ (3,449)
State	280	147	323
Foreign	1,143	1,209	16,703
Total current	1,036	3,368	13,577
Deferred:
Federal	(468)	(162)	790
State	(337)	746	(343)
Foreign	2,656	(701)	(3,934)
Total deferred	1,851	(117)	(3,487)
Change in valuation allowance	3,055		657
Total income tax provision	$ 5,942	$ 3,251	$ 10,747

Basis of Presentation and Significant Accounting Policies - Noncontrolling Interest (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Basis of Presentation and Significant Accounting Policies
Noncontrolling interest, beginning	$ 1,015	$ 1,368
Net loss attributable to noncontrolling interest of Avocados de Jalisco	377	(353)	$ (104)
Noncontrolling interest, ending	$ 1,392	$ 1,015	$ 1,368

- Definition

Amount of equity (deficit) attributable to noncontrolling interest. Excludes temporary equity.

+ References

+ Details

- Definition

Amount of Net Income (Loss) attributable to noncontrolling interest.

+ References + Details

Basis of Presentation and Significant Accounting Policies

12 Months Ended

Oct. 31, 2023

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

2. Basis of Presentation and Significant Accounting Policies

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S.

Our consolidated financial statements include the accounts of Calavo Growers, Inc. and our wholly owned subsidiaries, Calavo de Mexico S.A. de C.V. (Calavo de Mexico), Calavo Growers de Mexico, S. de R.L. de C.V. ( Calavo Growers de Mexico), Maui Fresh International, Inc. (Maui), Hawaiian Sweet, Inc. (HS), CW Hawaii Pride, LLC (HP), Renaissance Food Group, LLC (RFG), and Avocados de Jalisco, S.A.P.I. de C.V. (Avocados de Jalisco), in which we have an 83% ownership interest. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to valuation allowances for valuation allowances for accounts, goodwill, grower advances, inventories, long-lived assets, valuation of and estimated useful lives of identifiable intangible assets, stock-based compensation, promotional allowances and income taxes. On an ongoing basis, management reviews its estimates based upon currently available information. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

We consider all highly liquid financial instruments purchased with an original maturity date of three months or less to be cash equivalents. The carrying amounts of cash and cash equivalents approximate their fair values.

Restricted Cash

We have $0.8 million and $1.1 million in restricted cash at October 31, 2023 and 2022, respectively.

In connection with the New Credit Facility, we temporarily posted cash collateral to satisfy certain collateral requirements as we transitioned banks providing letters of credit related to our workers compensation policies. As of October 31, 2023, we recorded $0.8 million and $3.0 million as restricted cash and prepaid and other current assets, respectively, related to this transition.

In the prior year, we had restricted cash in our subsidiary Calavo de Mexico. This cash was restricted due to the 2013 tax assessment. In November 2022, this restriction was lifted.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of non-trade receivables, infrastructure advances and prepaid expenses. Non-trade receivables were $6.8 million and $4.8 million at October 31, 2023 and 2022, respectively. Included in non-trade receivables are $2.7 million and $1.8 million related to the current portion of non-CDM Mexican IVA (i.e. value-added) taxes at October 31, 2023 and 2022 (See Note 14). Infrastructure advances are discussed below. Prepaid expenses totaling $4.8 million and $3.1 million at October 31, 2023 and 2022, respectively, are primarily for insurance, rent and other items.

Accounts Receivable

Trade accounts receivable are reported at amounts due from customers, net of an allowance for doubtful accounts and customer deductions accounted for as variable consideration. The Company performs credit evaluations of customers and evaluates the need for allowances for potential credit losses based on historical experience, as well as current and expected general economic conditions.

The total allowance for estimated uncollectable accounts receivable balances and customer deductions were $5.2 million and $4.2 million as of October 31, 2023 and 2022, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is computed on a monthly weighted-average basis, which approximates the first-in, first-out method; market is based upon estimated replacement costs. Costs included in inventory primarily include the following: fruit, picking and hauling, overhead, labor, materials and freight.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are stated at cost and amortized over the lesser of their estimated useful lives or the term of the lease, using the straight-line method. Useful lives are as follows: buildings and improvements - 7 to 50 years; leasehold improvements - the lesser of the term of the lease or 7 years; equipment - 7 to 25 years; information systems hardware and software – 3 to 10 years. Significant repairs and maintenance that increase the value or extend the useful life of our fixed asset are capitalized. Ongoing maintenance and repairs are charged to expense.

Goodwill and Acquired Intangible Assets

Goodwill, defined as unidentified asset(s) acquired in conjunction with a business acquisition, is tested for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. We perform an assessment of goodwill for impairment on an annual basis, and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To the extent the carrying amount of the reporting unit’s allocated goodwill exceeds the unit’s fair value, we recognize an impairment of goodwill for the excess up to the amount of goodwill of that reporting unit.

In fiscal 2023 and 2022, the Company’s estimated fair value significantly exceeded its carrying value. The fair value of the Company’s reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow analysis, a market approach is utilized using observable market data such as comparable companies in similar lines of business that are publicly traded. The Company concluded based on its quantitative assessment that no goodwill impairment existed in the fiscal years ended October 31, 2023 and 2022. Goodwill impairment testing requires significant judgment and management estimates, including, but not limited to, the determination of (i) the number of reporting units, (ii) the goodwill and other assets and liabilities to be allocated to the reporting units and (iii) the fair values of the reporting units which includes forecasted cash flow. The estimates

and assumptions described above, along with other factors such as discount rates, will significantly affect the outcome of the impairment tests and the amounts of any resulting impairment losses.

Long-lived Assets

Long-lived assets, including fixed assets and intangible assets (other than goodwill), are continually monitored and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The determination of recoverability is based on an estimate of undiscounted cash flows expected to result from the use of an asset and its eventual disposition. The estimate of undiscounted cash flows is based upon, among other things, certain assumptions about future operating performance, growth rates and other factors. Estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to the business model or changes in operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, an impairment loss will be recognized, measured as the amount by which the carrying value exceeds the fair value of the asset. For fiscal years 2023 and 2022, we performed our annual assessment of long-lived assets and determined that no impairment existed as of October 31, 2023 and 2022.

Investments

We account for non-marketable investments using the equity method of accounting if the investment gives us the ability to exercise significant influence over, but not control, an investee. Significant influence generally exists when we have an ownership interest representing between 20% and 50% of the voting stock of the investee. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions.

In December 2014, Calavo formed a wholly-owned subsidiary Calavo Growers De Mexico, S. de R.L. de C.V. (Calavo Sub). In July 2015, Calavo Sub entered into a Shareholder Agreement with Grupo Belo del Pacifico, S.A. de C.V., (Belo) a Mexican company owned by Agricola Belher, and Agricola Don Memo, S.A. de C.V. (Don Memo). Don Memo, a Mexican corporation formed in July 2013, is engaged in the business of owning and improving land in Jalisco, Mexico for the growing and sale of tomatoes and other produce. Belo and Calavo Sub have an equal one-half ownership interest in Don Memo. Pursuant to a management service agreement, Belo, through its officers and employees, shall have day-to-day power and authority to manage the operations. This investment contribution represent Calavo Sub’s 50% ownership in Don Memo, which is included in investment in unconsolidated entities on our balance sheet. We use the equity method to account for this investment. As of October 31, 2023 and 2022, we have an investment of $2.9 million and $3.8 million, respectively, in Don Memo.

Advances to Suppliers

We advance funds to third-party growers primarily in Mexico for various farming needs. Typically, we obtain collateral (i.e. fruit, fixed assets, etc.) that approximates the value at risk, prior to making such advances. We continuously evaluate the ability of these growers to repay advances in order to evaluate the possible need to record an allowance. No such allowance was required at October 31, 2023 and 2022.

Pursuant to our distribution agreement with Agricola Belher (Belher) of Mexico, a producer of fresh vegetables, primarily tomatoes, for export to the U.S. market, Belher agreed, at their sole cost and expense, to harvest, pack, export, ship, and deliver tomatoes exclusively to our Company, primarily our Arizona facility. In exchange, we agreed to sell and distribute such tomatoes, make advances to Belher for operating purposes, provide additional advances as shipments are made during the season (subject to limitations, as defined), and return the proceeds from such tomato sales to Belher, net of our commission and aforementioned advances. These advances will be collected through settlements by the end of each year. As of October 31, 2023 and 2022, we have total advances of $5.4 million and $4.5 million, respectively, to Belher pursuant to this agreement, respectively, which are recorded in advances to suppliers.

Similar to Belher, we make advances to Don Memo for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from such tomato sales to Don Memo, net of our commission and aforementioned advances. As of October 31, 2023 and 2022, we have total advances of $7.3 million and $7.0 million,

respectively, to Don Memo, which is recorded in advances to suppliers, offset by tomato liabilities from the sales of tomatoes per the tomato marketing agreement.

We also have a distribution agreement with tomato grower Exportadora Silvalber (Silvalber). We made $2.8 million and $1.4 million in advances for operating purposes, similar to Belher and Don Memo, as of October 31, 2023 and 2022, respectively. Advances to suppliers are offset by tomato liabilities from the sales of tomatoes per the tomato marketing agreement.

Infrastructure Advances

Pursuant to our infrastructure agreements, we make advances to be used solely for the acquisition, construction, and installation of improvements to and on certain land owned/controlled by Belher and Don Memo, as well as packing line equipment.

In October 2020, we entered into an infrastructure loan agreement with Don Memo for $2.4 million secured by Don Memo’s property and equipment. This infrastructure loan accrues interest at 7.25%. In October 2020, we advanced $0.7 million related to this loan agreement. We advanced an additional $0.7 million, and $0.6 million in the first, and second quarters of fiscal 2021, respectively. We have a total balance outstanding of $1.6 million at October 31, 2023 (included in other assets). We had a total balance outstanding of $1.6 million at October 31, 2022 ($0.4 million is included in prepaids and other current assets and $1.2 million is included in other assets).

In July 2021, we made a bridge loan of $3.5 million to Belher. This loan is secured by certain farmland in Mexico and accrues interest at 10%. In the first quarter of fiscal 2022, this loan was amended to be due with installments of $0.9 million on July 31, 2022, $0.9 million on July 31, 2023 and $1.7 million on July 31, 2024. As part of this amended loan agreement, we can withhold payments on both the infrastructure advances and the bridge loan through the netting the amount due against the grower payable due to Belher. For each the years ended October 31, 2023 and 2022, we withheld $0.9 million and $1.1 million, respectively, from payments to Belher to offset the bridge loan repayments. The remaining bridge loan has been recorded as $1.7 million in prepaid expenses and other current assets.

Accrued Expenses

Included in accrued expenses are liabilities related to the receipt of goods and/or services for which an invoice has not yet been received. These totaled approximately $14.5 million and $28.7 million for the years ended October 31, 2023 and 2022, respectively.

Leases

Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The Company makes a determination if an arrangement constitutes a lease at inception, and categorizes the lease as either an operating or finance lease.

Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. For finance leases, we recognize interest expense and amortization of the right-of-use asset, and for operating leases, we recognize lease expense on a straight-line basis over the lease term. The interest expense amortization component of the finance lease liabilities is recorded within interest expense on the consolidated statements of operations.

When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. We estimated our incremental borrowing rate based upon a synthetic credit rating and yield curve analysis. As a result, the incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments.

We have elected the short-term lease recognition exemption for all leases that qualify (under one year term), meaning we will recognize expense on a straight-line basis and will not include the recognition of a right-of-use asset or lease liability. We will account for lease and non-lease components as a single-lease component for all leases.

Revenue Recognition

The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of net consideration expected to be received in exchange for transferring products. Revenue from product sales is governed primarily by customer pricing and related purchase orders (“contracts”) which specify shipping terms and certain aspects of the transaction price including variable considerations such as rebates, discounts and other sales incentives. Contracts are at standalone pricing. The performance obligation in these contracts is determined by each of the individual purchase orders and the respective stated quantities, with revenue being recognized at a point in time when obligations under the terms of the agreement are satisfied. This generally occurs with the transfer of control of our products to the customer and the product is delivered. The Company's customers have an implicit and explicit right to return non-conforming products. A provision for payment discounts and product return allowances, which is estimated, is recorded as a reduction of sales in the same period that the revenue is recognized.

Sales Incentives and Other Promotional Programs

The Company routinely offers sales incentives and discounts through various regional and national programs to our customers and consumers. These programs include product discounts or allowances, product rebates, product returns, one-time or ongoing trade-promotion programs with customers and consumer coupon programs that require the Company to estimate the expected costs of such programs. The costs associated with these activities are accounted for as reductions to the transaction price of the Company’s products and are, therefore, recorded as reductions to gross sales at the time of sale. The Company bases its estimates of incentive costs on historical trend experience with similar programs, actual incentive terms per customer contractual obligations and expected levels of performance of trade promotions, utilizing customer and sales organization inputs. The Company maintains liabilities at the end of each period for the estimated incentive costs incurred but unpaid for these programs. Differences between estimated and actual incentive costs are generally not material and are recognized in earnings in the period such differences are determined. Reserves for product returns, accrued rebates and promotional accruals are included in the consolidated balance sheets as part of accounts receivable.

Principal vs. Agent Considerations

We frequently enter into consignment arrangements with avocado and tomato growers and packers located outside of the U.S. and growers of certain perishable products in the U.S. We evaluate whether the performance obligation is a promise to transfer services to the customer (as the principal) or to arrange for services to be provided by another party (as the agent) using a control model. This evaluation determined that the Company is in control of establishing the transaction price, managing all aspects of the shipments process and taking the risk of loss for delivery, collection, and returns. Based on the Company’s evaluation of the control model, it determined that all of the Company’s major businesses act as the principal rather than the agent within their revenue arrangements and such revenues are reported on a gross basis.

Customers

We sell to retail grocery, foodservice, club stores, mass merchandisers, food distributors and wholesale customers. Our top ten customers accounted for approximately 66%, 59% and 58% of our consolidated net sales in fiscal years 2023, 2022 and 2021, respectively. Sales to our largest customer, Kroger (including its affiliates), represented approximately 17%, 15%, and 16% of net sales in each of fiscal years 2023, 2022, and 2021, respectively. Trader Joes, represented approximately 13% and 11% of net sales in fiscal years 2023 and 2022, respectively. Additionally, Wal-Mart (including its affiliates) represented approximately 9%, 10% and 11% of net sales in fiscal years 2023, 2022 and 2021, respectively. No other single customer accounted for more than 10% of our net sales in any of the last three fiscal years.

Shipping and Handling

We include shipping and handling fees billed to customers in net sales. Amounts incurred by us for freight are included in cost of goods sold.

Promotional Allowances

We provide for promotional allowances at the time of sale, based on our historical experience. Our estimates are generally based on evaluating the historical relationship between promotional allowances and gross sales. The derived percentage is then applied to the current period’s sales revenues in order to arrive at the appropriate debit to sales allowances for the period. The offsetting credit is made to an allowance on accounts receivable. When certain amounts of specific customer accounts are subsequently identified as promotional, they are written off against this allowance. Actual amounts may differ from these estimates and such differences are recognized as an adjustment to net sales in the period they are identified.

Consignment Arrangements

We frequently enter into consignment arrangements with avocado and tomato growers and packers located outside of the U.S. and growers of certain perishable products in the U.S. Although we generally do not take legal title to these avocados and perishable products, we do assume responsibilities (principally assuming credit risk, inventory loss and delivery risk, and pricing risk) that are consistent with acting as a principal in the transaction. Accordingly, the accompanying financial statements include sales and cost of sales from the sale of avocados and perishable products procured under consignment arrangements. Amounts recorded for each of the fiscal years ended October 31, 2023, 2022 and 2021 in the financial statements pursuant to consignment arrangements are as follows (in thousands):


	2023		2022		2021

Sales	$	56,811	$	59,748	$	52,287
Cost of Sales		51,937		53,238		45,945
Gross Profit	$	4,874	$	6,510	$	6,342

Advertising Expense

Advertising costs are expensed when incurred and are generally included as a component of selling, general and administrative expense. Such costs were approximately $0.4 million, $0.6 million and $0.4 million for fiscal years 2023, 2022, and 2021, respectively.

Research and Development

Research and development costs are expensed as incurred and are generally included as a component of selling, general and administrative expense. Total research and development costs for fiscal year 2023, 2022 and 2021 was approximately $0.1 million, $0.1 million and $0.3 million, respectively.

Restructuring Costs

For the year ended October 31, 2022, we recorded $2.8 million of consulting expenses (included in selling, general and administrative expenses) related to an enterprise-wide strategic business review conducted for the purpose of restructuring to improve the profitability of the organization and efficiency of our operations. We also recorded $5.5 million and $2.0 million for the years ended October 31, 2023 and 2022, respectively, of management recruiting and severance costs related to this restructuring initiative.

Other Income

Included in other income is dividend income totaling $0 million, $0.8 million, and $0.6 million for fiscal years 2023, 2022 and 2021, respectively. See Note 8 for related party disclosure related to other income.

Income Taxes

We account for deferred tax liabilities and assets for the future consequences of events that have been recognized in our consolidated financial statements or tax returns. Measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and tax bases of our assets and liabilities result in a deferred tax asset, we perform an evaluation of the probability of being able to realize the future benefits indicated by such asset. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on 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 should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

As a multinational corporation, we are subject to taxation in many jurisdictions, and the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. If we ultimately determine that the payment of these liabilities will be unnecessary, the liability will be reversed and we will recognize a tax benefit during the period in which it is determined the liability no longer applies. Conversely, we record additional tax charges in a period in which it is determined that a recorded tax liability is less than the ultimate assessment is expected to be.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.

Basic and Diluted Net Loss per Share

Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock options and contingent consideration. Diluted earnings per common share is calculated using the weighted-average number of common shares outstanding during the period after consideration of the dilutive effect of stock options and the effect of contingent consideration shares.

Basic and diluted net loss per share is calculated as follows (U.S. dollars in thousands, except per share data):


	Year ended October 31,
	2023		2022		2021
Numerator:
Net loss attributable to Calavo Growers, Inc.	$	(8,344)	$	(6,249)	$	(11,818)
Denominator:
Weighted average shares - Basic		17,750		17,663		17,621
Effect on dilutive securities – Restricted stock/units/options (1)		—		—		—
Weighted average shares - Diluted		17,750		17,663		17,621
Net loss per share attributable to Calavo Growers, Inc:
Basic	$	(0.47)	$	(0.35)	$	(0.67)
Diluted	$	(0.47)	$	(0.35)	$	(0.67)

(1)

Stock-Based Compensation

We account for awards of equity instruments issued to employees under the fair value method of accounting and recognize such amounts in our statements of operations. We measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest.

For the years ended October 31, 2023, 2022 and 2021, we recognized compensation expense of $5.2 million, $3.1 million, and $4.0 million related to stock-based compensation, respectively (See Note 12). For our restricted stock awards, the value of the stock-based compensation was determined from quoted market prices at the date of the grant. For our stock option awards, we measure the fair value of our stock options awards using the Black-Scholes-Merton and lattice-based option valuation models.

Foreign Currency Translation and Remeasurement

Our foreign operations are subject to exchange rate fluctuations and foreign currency transaction costs. The functional currency of our foreign subsidiaries is the United States (U.S.) dollar. As a result, monetary assets and liabilities are translated into U.S. dollars at exchange rates as of the balance sheet date and non-monetary assets, liabilities and equity are translated at historical rates. Sales and expenses are translated using a weighted-average exchange rate for the period. Gains and losses resulting from those remeasurements are included in income. Gains and losses resulting from foreign currency transactions are also recognized in income. Total foreign currency translation gains for fiscal 2023 and 2021, net of losses, was $1.8 million and $0.9 million, respectively. Total foreign currency translation losses for fiscal 2022, net of gains, was $1.0 million.

Fair Value of Financial Instruments

We believe that the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings approximates fair value based on either their short-term nature or on terms currently available to the Company in financial markets. Due to current market rates, we believe that our fixed-rate long-term obligations and finance leases have nearly the same fair value and carrying value of approximately $7.3 million and $6.0 million as of October 31, 2023 and 2022, respectively.

Derivative Financial Instruments

We were not a party to any material derivative instruments during the fiscal year. It is currently our intent not to use derivative instruments for speculative or trading purposes. Additionally, we do not use any hedging or forward contracts to offset market volatility.

Noncontrolling Interest

The following tables reconcile shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands).


	Year ended		Year ended
Avocados de Jalisco noncontrolling interest	October 31, 2023		October 31, 2022

Noncontrolling interest, beginning	$	1,015	$	1,368
Net income (loss) attributable to noncontrolling interest of Avocados de Jalisco		377		(353)
Noncontrolling interest, ending	$	1,392	$	1,015

Basis of Presentation and Significant Accounting Policies - SBC (Details) - USD ($) $ in Millions	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Basis of Presentation and Significant Accounting Policies
Stock-based compensation expense	$ 5.2	$ 3.1	$ 4.0

Mexican IVA taxes receivable (Details) $ in Millions, $ in Millions	1 Months Ended	12 Months Ended
	Jun. 30, 2023 USD ($)	Oct. 31, 2023 USD ($)	Oct. 31, 2022 USD ($)	Oct. 31, 2023 MXN ($)	Jan. 31, 2023 MXN ($)	Oct. 31, 2022 MXN ($)	Apr. 30, 2022 USD ($)	Apr. 30, 2022 MXN ($)
IVA receivables
IVA receivables balance		$ 49.9	$ 43.6	$ 913.6		$ 865.4
Unrecoverable value added tax		0.4			$ 6.9		$ 0.4	$ 6.9
Tax refund from SAT		1.1			$ 18.0
Receivable reserve		1.4
Income tax refunds	$ 2.8		$ 6.7
Interest proceeds	$ 1.7
Receivable recovery		$ 1.1

Stock-Based Compensation - Non-options (Details) - USD ($)						1 Months Ended		12 Months Ended
	Nov. 01, 2023	Mar. 07, 2023	Dec. 22, 2022	Dec. 01, 2022	Nov. 03, 2022	Jun. 30, 2023	Apr. 30, 2023	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Share-based Compensation
Stock-based compensation expense								$ 5,200,000	$ 3,100,000	$ 4,000,000.0
Restricted stock
Share-based Compensation
Stock closing price awarded (in dollars per share)								$ 34.13
Stock-based compensation expense								$ 2,300,000	$ 2,300,000
Outstanding (in shares), Beginning Balance	29,000							67,000
Granted (in shares)								38,000
Vested (in shares)								(72,000)
Forfeited (in shares)								(4,000)
Outstanding (in shares), Ending Balance								29,000	67,000
Outstanding, Weighted-Average Exercise Price, beginning balance	$ 35.24							$ 45.01
Granted, Weighted-Average Grant Price								34.13
Vested, Weighted-Average Grant Price								41.85
Forfeited, Weighted-Average Grant Price								37.85
Outstanding, Weighted-Average Exercise Price, ending balance								$ 35.24	$ 45.01
Aggregate Intrinsic Value								$ 747,000
Unrecognized stock based compensation expenses								$ 100,000
Unrecognized compensation cost period								3 months 18 days
Restricted stock \| Former CEO
Share-based Compensation
Shares granted value					$ 100,000
Stock closing price awarded (in dollars per share)			$ 30.12
Stock-based compensation expense								$ 800,000
Granted (in shares)			3,321
Vested (in shares)		(19,329)
Granted, Weighted-Average Grant Price			$ 30.12
Restricted stock \| Directors
Share-based Compensation
Stock closing price awarded (in dollars per share)	$ 24.35			$ 34.51
Stock-based compensation expense								1,100,000
Granted (in shares)	4,929			3,478
Vested (in shares)	(27,824)						(1,678)
Forfeited (in shares)							(1,800)
Granted, Weighted-Average Grant Price	$ 24.35			$ 34.51
Restricted stock \| Directors \| Aggregate
Share-based Compensation
Granted (in shares)	39,432			34,780
Vested (in shares)							(3,356)
Forfeited (in shares)							(3,600)
RSU and PRSU
Share-based Compensation
Stock closing price awarded (in dollars per share)				$ 34.51
Granted, Weighted-Average Grant Price				$ 34.51
RSU and PRSU \| Former CEO
Share-based Compensation
Accelerated stock-based compensation expense								$ 500,000
RSU
Share-based Compensation
Stock closing price awarded (in dollars per share)								$ 34.46
Stock-based compensation expense								$ 1,600,000	$ 700,000
Vesting period				3 years
Outstanding (in shares), Beginning Balance	51,000							52,000
Granted (in shares)				66,325				68,000
Vested (in shares)								(32,000)
Forfeited (in shares)								(37,000)
Outstanding (in shares), Ending Balance								51,000	52,000
Outstanding, Weighted-Average Exercise Price, beginning balance	$ 35.36							$ 39.17
Granted, Weighted-Average Grant Price								34.46
Vested, Weighted-Average Grant Price								39.25
Forfeited, Weighted-Average Grant Price								35.65
Outstanding, Weighted-Average Exercise Price, ending balance								$ 35.36	$ 39.17
Aggregate Intrinsic Value								$ 1,284,000
Unrecognized stock based compensation expenses								$ 1,200,000
Unrecognized compensation cost period								1 year 9 months 18 days
RSU \| Former CEO
Share-based Compensation
Vested (in shares)		(7,421)
Forfeited (in shares)		(11,285)
RSU \| Former Officers [Member]
Share-based Compensation
Accelerated stock-based compensation expense								$ 300,000
Vested (in shares)						(10,311)
Forfeited (in shares)						(6,123)
PRSU
Share-based Compensation
Stock closing price awarded (in dollars per share)								$ 34.51
Stock-based compensation expense								$ 200,000	$ 100,000
Vesting period				3 years
Outstanding (in shares), Beginning Balance								31,000
Granted (in shares)				66,325				66,000
Vested (in shares)								(14,000)
Forfeited (in shares)								(33,000)
Adjusted for performance factor (in shares)								(50,000)
Outstanding (in shares), Ending Balance									31,000
Outstanding, Weighted-Average Exercise Price, beginning balance								$ 37.49
Granted, Weighted-Average Grant Price								34.51
Vested, Weighted-Average Grant Price								35.65
Forfeited, Weighted-Average Grant Price								35.35
Adjusted for performance factor, Weighted-Average Grant Price								$ 35.22
Outstanding, Weighted-Average Exercise Price, ending balance									$ 37.49
Increase (decrease) deferred compensation reversal								$ 300,000
PRSU \| Former CEO
Share-based Compensation
Vested (in shares)		(13,687)
Forfeited (in shares)		(8,574)
PRSU \| Former Officers [Member]
Share-based Compensation
Forfeited (in shares)						(6,123)

Other assets and Intangibles - Amortization (Details) $ in Millions	Oct. 31, 2023 USD ($)
Goodwill and Intangible Assets
Amortization expense for 2024	$ 1.5
Amortization expense for 2025	1.5
Amortization expense for 2026	1.5
Amortization expense thereafter	$ 0.9

Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands					12 Months Ended
	Sep. 01, 2023	Jul. 11, 2023	Apr. 06, 2023	Dec. 14, 2022	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Dividends
Dividend paid (in dollars per share)	$ 0.10	$ 0.10	$ 0.10	$ 0.2875	$ 0.4875		$ 1.15
Dividend amount paid to shareholders		$ 1,800	$ 1,700	$ 5,200	$ 10,433	$ 20,330	$ 20,343

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Oct. 31, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation and Significant Accounting Policies - Accrued Expenses (Details) - USD ($) $ in Millions	Oct. 31, 2023	Oct. 31, 2022
Basis of Presentation and Significant Accounting Policies
Accrued liabilities related to goods and services	$ 14.5	$ 28.7

Stock-Based Compensation

12 Months Ended

Oct. 31, 2023

Stock-Based Compensation

Stock-Based Compensation

12. Stock-Based Compensation

The 2020 Equity Incentive Plan

In April 2021, our shareholders approved the Calavo Growers, Inc. 2020 Equity Incentive Plan (the 2020 Plan). All directors, officers, employees and consultants (including prospective directors, officers, employees and consultants) of Calavo and its subsidiaries are eligible to receive awards under the 2020 Plan. This is a five-year plan, with up to 1,500,000 shares issuable through December 9, 2025.

Restricted Stock Awards (RSAs)

On November 3, 2022, our former Chief Executive Officer (CEO) entered into an amendment to his employment agreement, which changed $100,000 of his guaranteed STIP cash bonus for fiscal 2022 to $100,000 worth of unrestricted Calavo common stock. On December 22, 2022, our CEO was granted 3,321 shares of unrestricted common stock. The closing share price of our common stock at the grant date was $30.12.

On December 1, 2022, our 10 directors were granted 3,478 restricted shares each (for a total of 34,780 shares). These shares have full voting rights and participate in dividends as if unrestricted. The closing share price of our stock on such grant date was $34.51. Two directors did not seek reelection in April of 2023, and, consequently, 1,678 shares for each director (for a total of 3,356 shares) vested and became unrestricted while 1,800 shares for each director (for a total of 3,600 shares) were forfeited. As of November 1, 2023, the remaining 27,824 shares vested and became unrestricted. The total recognized stock-based compensation expense for these grants was $1.1 million for the year ended October 31, 2023.

On March 7, 2023, our former CEO was terminated. As part of his Separation Agreement, the remaining 19,329 restricted shares that were granted as part of his original employment agreement were immediately vested. The total stock-based compensation expense recognized was $0.8 million for the year ended October 31, 2023.

The total recognized stock-based compensation expense for restricted stock awards was $2.3 million for each of the years ended October 31, 2023 and 2022. As of October 31, 2023, there was less than $0.1 million of unrecognized stock-based compensation costs related to non-vested RSAs, which the Company expects to recognize over a weighted-average period of 0.3 years.

A summary of restricted stock activity, related to our 2011 Plan and 2020 Plan, is as follows (in thousands, except for per share amounts):


		Weighted-Average		Aggregate
	Number of Shares	Grant Price		Intrinsic Value
Outstanding at October 31, 2022	67	$	45.01
Granted	38	$	34.13
Vested	(72)	$	41.85
Forfeited	(4)	$	37.85
Outstanding at October 31, 2023	29	$	35.24	$	747

Restricted Stock Units (RSUs) and Performance Restricted Stock Units (PRSUs)

On December 1, 2022, we issued RSUs and PRSUs for officers and other members of management as part of our long-term incentive plan. The RSUs are time-based and vest annually in equal amounts over a three-year period. The PRSUs are based on three-year cumulative performance targets of net sales, adjusted EBITDA and return on invested capital and vest entirely at the third anniversary. We granted 66,325 RSUs and 66,325 PRSUs at a grant price of $34.51.

On March 7, 2023, our former CEO was terminated. As part of his Separation Agreement, 7,421 RSUs and 13,687 PRSUs immediately vested. The accelerated stock-based compensation expense recognized was $0.5 million for the year ended October 31, 2023. With his termination, 8,574 PRSUs and 11,285 RSUs were forfeited. In June of 2023, two of our Senior Vice Presidents departed the Company and, pursuant to their employment agreements, 10,311 RSUs immediately vested. The accelerated stock-based compensation expense recognized was $0.3 million for the year ended October 31, 2023. With these departures 6,123 PRSUs and 6,123 RSUs were forfeited.

On November 1, 2023, each of our 8 directors were granted 4,929 RSUs each (for a total of 39,432 RSUs) at a price of $24.35 and will vest in one year.

The total recognized stock-based compensation expense for RSUs was $1.6 million and $0.7 million for the year ended October 31, 2023 and 2022, respectively. As of October 31, 2023, there was $1.2 million of unrecognized stock-based compensation costs related to non-vested RSUs, which the Company expects to recognize over a weighted-average period of 1.8 years.

A combined summary of RSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts):


	Number of Shares	Weighted-Average		Aggregate
	Represented	Grant Price		Intrinsic Value
Outstanding at October 31, 2022	52	$	39.17
Granted	68	$	34.46
Vested	(32)	$	39.25
Forfeited	(37)	$	35.65
Outstanding at October 31, 2023	51	$	35.36	$	1,284

At the end of each reporting period, the Company will adjust compensation expense for the PRSUs based on its best estimate of attainment of the specified performance targets. The cumulative effect on current and prior periods of a change in the estimated number of PRSUs that are expected to be earned will be recognized as an adjustment in the period of the adjustment. As of October 31, 2023, the Company determined that it was not probable that any of the PRSUs for the 2022 or 2023 three-year cumulative performance grant would vest. The Company recorded a net reversal of approximately $0.3 million of previously amortized stock-based compensation for the year months ended October 31, 2023, for all PRSUs. The total recognized stock-based compensation expense for PRSUs was $0.2 million and $0.1 million for the year ended October 31, 2023 and 2022, respectively.

The summary of PRSU activity, related to our 2020 Plan, is as follows (in thousands, except for per share amounts):


	Number of Shares	Weighted-Average		Aggregate
	Represented	Grant Price		Intrinsic Value
Outstanding at October 31, 2022	31	$	37.49
Granted	66	$	34.51
Vested	(14)	$	35.65
Forfeited	(33)	$	35.35
Adjusted for performance factor	(50)	$	35.22
Outstanding at October 31, 2023	—	$	—	$	—

Stock Options

Stock options are granted with exercise prices of not less than the fair market value at grant date, generally vest over one to five years and generally expire two to five years after the vest date. We settle stock option exercises with newly issued shares of common stock.

We measure compensation cost for all stock-based awards at fair value on the date of grant and recognize compensation expense in our consolidated statements of operations over the service period that the awards are expected to vest.

In March 2023, the Company agreed to award our newly appointed CEO a stock option to purchase 500,000 shares of the Company’s common stock pursuant to the 2020 Equity Incentive Plan, which will vest in the following four tranches upon satisfaction of the milestones described below (the “Milestones”):

(i) 200,000 shares subject to the option shall vest and become exercisable on March 10, 2024;

(ii) 100,000 shares subject to the option shall vest and become exercisable (1) if the closing price per share of the Company’s common stock, as reported by The Nasdaq Stock Market, is greater than or equal to $50.00 (the “Target Share Price”), and (2) the average closing price per share of the Company’s common stock for any thirty (30) day period

following achievement of the Target Share Price (the “Thirty-day Average Share Price”), is greater than or equal to $50.00, as reported by Nasdaq;

(iii) 100,000 shares subject to the option shall vest and become exercisable (1) upon achievement of the Target Share Price, and (2) the Thirty-day Average Share Price is greater than or equal to $60.00, as reported by Nasdaq; and

(iv) 100,000 shares subject to the option shall vest and become exercisable (1) upon achievement of the Target Share Price, and (2) the Thirty-day Average Share Price is greater than or equal to $70.00, as reported by Nasdaq;

provided, however, that satisfaction of each Milestone is subject to our newly appointed CEO continuing as the President and CEO of the Company through each vesting event; and provided further that regardless of when he achieves the Milestones set forth in subsections (ii) through (iv) above, the applicable tranche shall only vest on or after March 10, 2024.

We measure the fair value of our stock option awards on the date of grant. The following assumptions were used in the estimated grant date fair value calculations for stock options:


	March 2023
Risk-free interest rate	4.31	%
Expected volatility	35.0	%
Dividend yield	1.6	%
Expected life (years)	3.0

The expected stock price volatility rates were based on the historical volatility of our common stock. The risk free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant for periods approximating the expected life of the option. The expected life represents the average period of time that options granted are expected to be outstanding, as calculated using the simplified method described in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107.

The Black-Scholes-Merton and lattice-based option valuation models were developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because options held by our directors and employees have characteristics significantly different from those of traded options, in our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of these options. For the market award, we determined both the fair value and derived service period using a Monte Carlo simulation model on the closing date.

Based on the above details and assumptions, we valued these options at $1.8 million. We will amortize this amount on a straight-line basis over the derived service period.

The total recognized stock-based compensation expense for options was $1.3 million for the year ended October 31, 2023. As of October 31, 2023, there was $0.7 million of unrecognized stock-based compensation costs related to options, which the Company expects to recognize over a weighted-average period of 0.4 years.

A summary of stock option activity, related to our 2011 and 2020 Management Incentive Plan, is as follows (in thousands, except for per share amounts):


		Weighted-Average		Aggregate
		Exercise		Intrinsic
	Number of Shares	Price		Value
Outstanding at October 31, 2022	27	$	44.67
Exercised	(2)	$	23.48
Granted	500	$	24.39
Outstanding at October 31, 2023	525	$	25.44	$	475
Exercisable at October 31, 2023	17	$	49.52	$	—

Long-Term Obligations

12 Months Ended

Oct. 31, 2023

Long-Term Obligations

Long-Term Obligations

11. Long-Term Obligations

Long-term obligations at fiscal year ends consist of the following (in thousands):


	2023		2022
Finance leases		7,251		6,021
Less current portion		(1,604)		(1,574)
	$	5,647	$	4,447

See Note 15 for additional information.

Income Taxes (Tables)

12 Months Ended

Oct. 31, 2023

Income Taxes

Summary of Income Tax Provision (Benefit)


	2023		2022		2021

Current:
Federal	$	(387)	$	2,012	$	(3,449)
State		280		147		323
Foreign		1,143		1,209		16,703
Total current		1,036		3,368		13,577

Deferred:
Federal		(468)		(162)		790
State		(337)		746		(343)
Foreign		2,656		(701)		(3,934)
Total deferred		1,851		(117)		(3,487)
Change in valuation allowance		3,055		—		657
Total income tax provision	$	5,942	$	3,251	$	10,747

Schedule of loss before income taxes


	2023		2022		2021
Domestic	$	(8,741)	$	(1,411)	$	(4,959)
Foreign		6,716		(1,940)		3,784
Income (loss) before taxes	$	(2,025)	$	(3,351)	$	(1,175)

Components of Deferred Taxes

Significant components of our deferred tax assets (liabilities) as of October 31, are as follows (in thousands):


	2023		2022


Intangible assets	$	941	$	2,828
Stock-based compensation		316		715
State taxes		7		6
Allowance for accounts receivable		1,276		936
Inventories		591		442
Accrued liabilities		2,238		1,143
Operating lease liabilities		14,444		14,861
Net operating loss		4,109		549
Capital loss carryover		806		804
Credits and incentives		1,099		1,194
Total deferred income tax assets		25,827		23,478

Property, plant, and equipment		(6,340)		(2,002)
Operating lease - right of use assets		(12,111)		(13,723)
Other		(227)		(490)
Total deferred income tax liabilities		(18,678)		(16,215)
Valuation allowance		(4,885)		(1,830)
Net deferred income tax assets	$	2,264	$	5,433

The Company’s net deferred income tax assets as presented in the consolidated balance sheets consists of the following items as of October 31, (in thousands):


	Year Ended October 31,
	2023		2022
Deferred income tax assets	$	3,010	$	5,433
Deferred income tax liabilities		(746)		—
Net deferred income tax assets	$	2,264	$	5,433

Reconciliation of effective tax rate


	2023		2022		2021

Federal statutory tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal effects	0.9		(1.3)		11.6
Rate differential on NOL carryback	—		—		125.8
Foreign tax rate differential	(29.8)		5.2		16.1
Uncertain tax positions	—		5.1		(1,059.9)
Stock based compensation	(26.3)		(6.1)		(16.7)
Provision to return	(12.3)		(59.9)		39.2
US tax on foreign income, net	(15.8)		—		—
State rate change	0.9		(2.5)		9.2
Valuation allowance	(150.7)		(24.2)		(44.1)
Limits on executive compensation	(21.6)		—		—
Other permanent differences	(19.1)		(33.8)		—
Other	(40.6)		(0.5)		(15.5)
	(293.4)	%	(97.0)	%	(913.3)	%

Reconciliation of unrecognized taxes

A reconciliation of the beginning and ending amount of gross unrecognized taxes (exclusive of interest and penalties) was as follows (in thousands):


	Year Ended October 31,
	2023		2022
Beginning balance	$	11,131	$	11,303
Reductions based on tax positions related to prior periods		—		(172)
Gross increase - Tax positions in prior periods		—		—
Gross increase - Tax positions in current period		—		—
Ending balance	$	11,131	$	11,131

Description of the business (Details)	12 Months Ended
Description of the business (Details)	Oct. 31, 2023 segment
Description of the business
Number of reportable segments	2

Segment Information - Gross Profit (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Segment reporting information
Net sales	$ 971,948	$ 1,191,073	$ 1,055,830
Cost of sales	901,992	1,117,228	998,405
Gross profit	69,956	73,845	57,425
Grown
Segment reporting information
Net sales	527,396	698,205	586,030
Prepared
Segment reporting information
Net sales	444,552	492,868	469,800
Operating segments \| Grown
Segment reporting information
Net sales	529,025	700,270
Cost of sales	476,862	650,105
Gross profit	52,163	50,165
Operating segments \| Prepared
Segment reporting information
Net sales	444,552	492,868
Cost of sales	426,759	469,188
Gross profit	17,793	23,680
Intersegment Eliminations
Segment reporting information
Net sales	(1,629)	(2,065)	(2,497)
Cost of sales	(1,629)	(2,065)
Intersegment Eliminations \| Grown
Segment reporting information
Net sales	(1,629)	(2,065)	(2,497)
Intersegment Eliminations \| Prepared
Segment reporting information
Net sales	$ 0	$ 0	$ 0

- Definition

Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

Basis of Presentation and Significant Accounting Policies - Prepaid (Details) - USD ($) $ in Millions	Oct. 31, 2023	Oct. 31, 2022
Basis of Presentation and Significant Accounting Policies
Non-trade receivables	$ 6.8	$ 4.8
Mexican IVA	2.7	1.8
Prepaid expenses	$ 4.8	$ 3.1

Income Taxes - Reconciliation (Details)	12 Months Ended
Income Taxes - Reconciliation (Details)	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Effective tax rate reconciliation (as a percent)
Federal statutory tax rate	21.00%	21.00%	21.00%
State taxes, net of federal effects	0.90%	(1.30%)	11.60%
Rate differential on NOL carryback			125.80%
Foreign tax rate differential	(29.80%)	5.20%	16.10%
Uncertain tax positions		5.10%	(1059.90%)
Stock based compensation	(26.30%)	(6.10%)	(16.70%)
Provision to return	(12.30%)	(59.90%)	39.20%
US tax on foreign income, net	(15.80%)
State rate change	0.90%	(2.50%)	9.20%
Valuation allowance	(150.70%)	(24.20%)	(44.10%)
Limits on executive compensation	(21.60%)
Other permanent differences	(19.10%)	(33.80%)
Other	(40.60%)	(0.50%)	(15.50%)
Effective income tax rate	(293.40%)	(97.00%)	(913.30%)

Basis of Presentation and Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022
Basis of Presentation and Significant Accounting Policies
Goodwill impairment	$ 0.0	$ 0.0
Impairment of long-lived assets	$ 0.0	$ 0.0

Revolving Credit Facilities - Maturity (Details) - Term Loan-Capex Credit Facility $ in Millions	Oct. 31, 2023 USD ($)
Debt
2024	$ 0.6
2025	0.7
2026	0.7
2027	0.7
2028	$ 1.4

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

Leases

12 Months Ended

Oct. 31, 2023

Leases

Leases

15. Leases

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the term. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate.

We also lease certain property, plant and equipment, including office facilities, under operating leases. The lease term consists of the noncancellable period of the lease and the periods covered by options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain any residual value guarantees.

Lease Position

The following table presents the lease-related assets and liabilities recorded on the balance sheet as of October 31, 2023 and 2022 (in thousands):


		October 31,		October 31,
		2023		2022

Assets
Non-current assets:
Operating lease assets	Operating lease right-of-use assets	$	48,033	$	54,518
Finance lease assets	Property, plant and equipment, net		6,777		5,721
		$	54,810	$	60,239
Liabilities
Current liabilities:
Operating	Current portion of operating leases	$	7,062	$	6,925
Finance	Current portion of long-term obligations and finance leases		1,604		1,574
Long-term obligations
Operating	Long-term operating leases, less current portion		45,393		52,140
Finance	Long-term obligations and finance leases, less current portion		5,647		4,447
		$	59,706	$	65,086


Weighted-average remaining lease term:	Fiscal 2023		Fiscal 2022
Operating leases	8.2 years		9.3 years
Finance leases	6.5 years		6.9 years

Weighted-average discount rate:
Operating leases	3.10	%	2.87	%
Finance leases	4.83	%	3.62	%

Lease Costs

The following table presents certain information related to the lease costs for finance and operating leases for the years ended October 31, 2023 and 2022 (in thousands):


	Year ended		Year ended
	October 31, 2023		October 31, 2022
Amortization of financing lease assets (recorded in cost of sales)	$	1,913	$	1,756
Operating lease cost		8,511		8,733
Short-term lease cost		2,476		2,483
Sublease income		—		(30)
Variable lease cost		198		133
Interest on financing lease liabilities		273		213
Total lease cost	$	13,371	$	13,288

Other Information

The following table presents supplemental cash flow information related to the leases for the years ended October 31, 2023 and 2022 (in thousands):


	Year ended		Year ended
Cash paid for amounts included in the measurement of lease liabilities	October 31, 2023		October 31, 2022
Operating cash flows for operating leases	$	7,043	$	7,012
Financing cash flows for finance leases		1,793		1,683
Operating cash flows for finance leases		262		213

The total right-of-use assets obtained in exchange for new operating leases for the years ended October 31, 2023 and 2022 were $0.7 million and $1.0 million, respectively.

Undiscounted Cash Flows

The following table reconciles the undiscounted cash flows for each of the first five years and total remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of October 31, 2023 (in thousands):


	Operating		Finance
	Leases		Leases
2024	$	8,556	$	1,909
2025		7,539		1,415
2026		7,058		1,137
2027		6,670		997
2028		6,501		748
Thereafter		23,204		2,235
Total lease payments		59,528		8,441
Less: imputed interest		7,073		1,190
Total lease liability	$	52,455	$	7,251

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Noncontrolling Interest	Total
Beginning balance at Oct. 31, 2020	$ 18	$ 165,000	$ 89,512	$ 1,472	$ 256,002
Beginning balance, shares at Oct. 31, 2020	17,661
Issuance of common stock in connection with stock-based compensation, net of tax withholdings		(817)			(817)
Issuance of common stock in connection with stock-based compensation, net of tax withholdings (in shares)	25
Stock-based compensation		3,950			3,950
Dividends declared to shareholders			(20,330)		(20,330)
Avocados de Jalisco noncontrolling interest				(104)	(104)
Net loss attributable to Calavo Growers, Inc.			(11,818)		(11,818)
Ending balance at Oct. 31, 2021	$ 18	168,133	57,364	1,368	226,883
Ending balance, shares at Oct. 31, 2021	17,686
Issuance of common stock in connection with stock-based compensation, net of tax withholdings		(49)			(49)
Issuance of common stock in connection with stock-based compensation, net of tax withholdings (in shares)	46
Stock-based compensation		3,139			3,139
Avocados de Jalisco noncontrolling interest				(353)	(353)
Net loss attributable to Calavo Growers, Inc.			(6,249)		(6,249)
Ending balance at Oct. 31, 2022	$ 18	171,223	51,115	1,015	223,371
Ending balance, shares at Oct. 31, 2022	17,732
Issuance of common stock in connection with stock-based compensation, net of tax withholdings		48			48
Issuance of common stock in connection with stock-based compensation, net of tax withholdings (in shares)	29
Stock-based compensation		5,210			5,210
Dividends declared to shareholders			(10,433)		(10,433)
Avocados de Jalisco noncontrolling interest				377	377
Net loss attributable to Calavo Growers, Inc.			(8,344)		(8,344)
Ending balance at Oct. 31, 2023	$ 18	$ 176,481	$ 32,338	$ 1,392	$ 210,229
Ending balance, shares at Oct. 31, 2023	17,761

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

- Definition

Amount of equity (deficit) attributable to parent and noncontrolling interest. Excludes temporary equity.

+ References

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+ Details

Income Taxes - Carryforward (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022
Valuation allowance
Valuation allowance	$ 4,885	$ 1,830
Change in valuation allowance	3,100	600
State
Valuation allowance
Operating loss carryforwards	13,400	$ 9,100
Federal
Valuation allowance
Operating loss carryforwards	$ 6,600

Leases (Tables)

12 Months Ended

Oct. 31, 2023

Leases

Schedule of lease-related assets and liabilities and cost

The following table presents the lease-related assets and liabilities recorded on the balance sheet as of October 31, 2023 and 2022 (in thousands):


		October 31,		October 31,
		2023		2022

Assets
Non-current assets:
Operating lease assets	Operating lease right-of-use assets	$	48,033	$	54,518
Finance lease assets	Property, plant and equipment, net		6,777		5,721
		$	54,810	$	60,239
Liabilities
Current liabilities:
Operating	Current portion of operating leases	$	7,062	$	6,925
Finance	Current portion of long-term obligations and finance leases		1,604		1,574
Long-term obligations
Operating	Long-term operating leases, less current portion		45,393		52,140
Finance	Long-term obligations and finance leases, less current portion		5,647		4,447
		$	59,706	$	65,086


Weighted-average remaining lease term:	Fiscal 2023		Fiscal 2022
Operating leases	8.2 years		9.3 years
Finance leases	6.5 years		6.9 years

Weighted-average discount rate:
Operating leases	3.10	%	2.87	%
Finance leases	4.83	%	3.62	%

Lease Costs

The following table presents certain information related to the lease costs for finance and operating leases for the years ended October 31, 2023 and 2022 (in thousands):


	Year ended		Year ended
	October 31, 2023		October 31, 2022
Amortization of financing lease assets (recorded in cost of sales)	$	1,913	$	1,756
Operating lease cost		8,511		8,733
Short-term lease cost		2,476		2,483
Sublease income		—		(30)
Variable lease cost		198		133
Interest on financing lease liabilities		273		213
Total lease cost	$	13,371	$	13,288

Other Information

The following table presents supplemental cash flow information related to the leases for the years ended October 31, 2023 and 2022 (in thousands):


	Year ended		Year ended
Cash paid for amounts included in the measurement of lease liabilities	October 31, 2023		October 31, 2022
Operating cash flows for operating leases	$	7,043	$	7,012
Financing cash flows for finance leases		1,793		1,683
Operating cash flows for finance leases		262		213

Schedule of undiscounted cash flows of operating lease


	Operating		Finance
	Leases		Leases
2024	$	8,556	$	1,909
2025		7,539		1,415
2026		7,058		1,137
2027		6,670		997
2028		6,501		748
Thereafter		23,204		2,235
Total lease payments		59,528		8,441
Less: imputed interest		7,073		1,190
Total lease liability	$	52,455	$	7,251

Schedule of undiscounted cash flows of finance lease


	Operating		Finance
	Leases		Leases
2024	$	8,556	$	1,909
2025		7,539		1,415
2026		7,058		1,137
2027		6,670		997
2028		6,501		748
Thereafter		23,204		2,235
Total lease payments		59,528		8,441
Less: imputed interest		7,073		1,190
Total lease liability	$	52,455	$	7,251

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Oct. 31, 2023	Nov. 30, 2023	Apr. 30, 2023
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Oct. 31, 2023
Document Transition Report	false
Entity File Number	000-33385
Entity Registrant Name	CALAVO GROWERS, INC
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	33-0945304
Entity Address, Address Line One	1141-A Cummings Road
Entity Address, City or Town	Santa Paula
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	93060
City Area Code	805
Local Phone Number	525-1245
Title of 12(b) Security	Common Stock
Trading Symbol	CVGW
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Document Financial Statement Error Correction [Flag]	false
Entity Shell Company	false
Entity Public Float			$ 0.5
Entity Common Stock, Shares Outstanding		17,798,620
Entity Central Index Key	0001133470
Current Fiscal Year End Date	--10-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Name	Deloitte & Touche LLP
Auditor Location	Los Angeles, California
Auditor Firm ID	34

Stock-Based Compensation - General (Details) - 2020 Management Incentive Plan	1 Months Ended
	Apr. 30, 2021 shares
Share-based Compensation
Award expiration period	5 years
Common stock shares authorized (in shares)	1,500,000

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Basis of Presentation and Significant Accounting Policies - PPE and Goodwill (Details)	Oct. 31, 2023
Minimum \| Buildings and improvements
Significant Accounting Policies
Property, Plant and Equipment, Useful Life	7 years
Minimum \| Leasehold improvements
Significant Accounting Policies
Property, Plant and Equipment, Useful Life	7 years
Minimum \| Equipment
Significant Accounting Policies
Property, Plant and Equipment, Useful Life	7 years
Minimum \| Information systems - hardware and software
Significant Accounting Policies
Property, Plant and Equipment, Useful Life	3 years
Maximum \| Buildings and improvements
Significant Accounting Policies
Property, Plant and Equipment, Useful Life	50 years
Maximum \| Equipment
Significant Accounting Policies
Property, Plant and Equipment, Useful Life	25 years
Maximum \| Information systems - hardware and software
Significant Accounting Policies
Property, Plant and Equipment, Useful Life	10 years

Other assets and Intangibles - Other (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Goodwill and Intangible Assets
Mexican IVA (i.e. value-added) taxes receivable	$ 49,888	$ 43,625
Infrastructure advances	1,641	1,241
Bridge loan to Agricola Belher		1,700
Other	930	604
Total	$ 52,459	$ 47,170

Pay vs Performance Disclosure - USD ($) $ in Thousands	12 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Pay vs Performance Disclosure
Net Income (Loss)	$ (8,344)	$ (6,249)	$ (11,818)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Basis of Presentation and Significant Accounting Policies - Costs (Details) - USD ($) $ in Millions	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Basis of Presentation and Significant Accounting Policies
Research and development costs	$ 0.1	$ 0.1	$ 0.3
Investment Income, Dividend	0.0	0.8	$ 0.6
Consulting fees		2.8
Employee costs	$ 5.5	$ 2.0

Leases - Undiscounted Future Payments (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Operating Leases
2024	$ 8,556
2025	7,539
2026	7,058
2027	6,670
2028	6,501
Thereafter	23,204
Total lease payments	59,528
Less: imputed interest	7,073
Operating lease liability	52,455
Finance Leases
2024	1,909
2025	1,415
2026	1,137
2027	997
2028	748
Thereafter	2,235
Total lease payments	8,441
Less: imputed interest	1,190
Finance lease liability	$ 7,251	$ 6,021

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Cash Flows from Operating Activities:
Net loss	$ (7,967)	$ (6,602)	$ (11,922)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	17,282	16,589	17,571
Non-cash operating lease expense	38	20	83
Net loss from unconsolidated entities	879	564	1,719
Realized and unrealized net loss on Limoneira shares		8,605	(3,858)
Divesture of Calavo Salsa Lisa	624
Impairment and non-cash charges related to closure of Florida facility		317	9,748
Recovery from reserve for FreshRealm note receivable and impairment of investment			(6,130)
Provision for uncollectible Mexican IVA taxes receivable	2,474
Stock-based compensation expense	5,210	3,139	3,950
Gain on sale of Temecula packinghouse	(216)	(216)	(216)
Loss on disposal of property, plant, and equipment	40	186	(170)
Deferred income taxes	1,851	(117)	(2,526)
Effect on cash of changes in operating assets and liabilities:
Accounts receivable, net	(2,360)	19,850	(15,024)
Inventories	(989)	1,837	412
Prepaid expenses and other current assets	(5,466)	(147)	3,567
Advances to suppliers	(1,326)	(4,677)	(1,632)
Income taxes receivable/payable	3,620	8,128	(933)
Other assets	(7,594)	(4,961)	(7,831)
Payable to growers	(5,435)	(2,809)	11,687
Trade accounts payable, accrued expenses and other liabilities	(15,131)	10,527	15,077
Net cash provided by (used in) operating activities	(14,466)	50,233	13,572
Cash Flows from Investing Activities:
Purchases of property, plant, and equipment	(10,694)	(9,769)	(11,438)
Loan to Agricola Belher			(3,500)
Proceeds received from Limoneira stock sales		18,450
Proceeds received from FreshRealm Separation Agreement recovery			6,000
Proceeds received on repayment of infrastructure loan			900
Infrastructure advance to tomato growers			(1,326)
Net cash provided by (used in) investing activities	(10,694)	8,681	(9,364)
Cash Flows from Financing Activities:
Payment of dividend to shareholders	(10,433)	(20,330)	(20,343)
Proceeds from revolving credit facilities	256,912	267,200	334,850
Payments on revolving credit facilities	(223,089)	(303,700)	(317,700)
Payments of debt issuance cost	(693)
Payments of minimum withholding taxes on net share settlement of equity awards		(96)	(864)
Proceeds from term loan	4,063
Proceeds from sale leaseback		240
Payments on long-term obligations and finance leases	(1,930)	(1,996)	(1,398)
Proceeds from stock option exercises	48	47	47
Net cash provided (used in) by financing activities	24,878	(58,635)	(5,408)
Net increase (decrease) in cash, cash equivalents and restricted cash	(282)	279	(1,200)
Cash, cash equivalents and restricted cash, beginning of period	3,134	2,855	4,055
Cash, cash equivalents and restricted cash, end of period	2,852	3,134	2,855
Supplemental Information:
Interest	2,492	1,482	687
Income taxes	1,492	2,601	3,047
Noncash Investing and Financing Activities:
Right of use assets obtained in exchange for new financing lease obligations	2,814	611	1,430
Settlement of Agricola Belher infrastructure advance offset against payable to growers	928	1,060
Property, plant, and equipment included in trade accounts payable and accrued expenses	$ 1,794	$ 160	$ 312

Basis of Presentation and Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Basis of Presentation and Significant Accounting Policies
Foreign currency gains (losses)	$ (1.8)	$ 1.0	$ (0.9)
Fixed rate long term obligation fair value	$ 7.3	$ 6.0

Basis of Presentation and Significant Accounting Policies (Policies)

12 Months Ended

Oct. 31, 2023

Basis of Presentation and Significant Accounting Policies

Business

Basis of Presentation

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S.

Consolidated financial statements

Use of Estimates

Cash and Cash Equivalents

Restricted Cash

We have $0.8 million and $1.1 million in restricted cash at October 31, 2023 and 2022, respectively.

In connection with the New Credit Facility, we temporarily posted cash collateral to satisfy certain collateral requirements as we transitioned banks providing letters of credit related to our workers compensation policies. As of October 31, 2023, we recorded $0.8 million and $3.0 million as restricted cash and prepaid and other current assets, respectively, related to this transition.

In the prior year, we had restricted cash in our subsidiary Calavo de Mexico. This cash was restricted due to the 2013 tax assessment. In November 2022, this restriction was lifted.

Prepaid Expenses and Other Current Assets

Accounts Receivable

The total allowance for estimated uncollectable accounts receivable balances and customer deductions were $5.2 million and $4.2 million as of October 31, 2023 and 2022, respectively.

Inventories

Property, Plant, and Equipment

Goodwill and Acquired Intangible Assets

and assumptions described above, along with other factors such as discount rates, will significantly affect the outcome of the impairment tests and the amounts of any resulting impairment losses.

Long-lived Assets

Investments

Advances to Suppliers

respectively, to Don Memo, which is recorded in advances to suppliers, offset by tomato liabilities from the sales of tomatoes per the tomato marketing agreement.

Infrastructure Advances

Accrued Expenses

Leases

Revenue Recognition

Sales Incentives and Other Promotional Programs

Principal vs. Agent Considerations

Customers

Shipping and Handling

We include shipping and handling fees billed to customers in net sales. Amounts incurred by us for freight are included in cost of goods sold.

Promotional Allowances

Consignment Arrangements

We frequently enter into consignment arrangements with avocado and tomato growers and packers located outside of the U.S. and growers of certain perishable products in the U.S. Although we generally do not take legal title to these avocados and perishable products, we do assume responsibilities (principally assuming credit risk, inventory loss and delivery risk, and pricing risk) that are consistent with acting as a principal in the transaction. Accordingly, the accompanying financial statements include sales and cost of sales from the sale of avocados and perishable products procured under consignment arrangements. Amounts recorded for each of the fiscal years ended October 31, 2023, 2022 and 2021 in the financial statements pursuant to consignment arrangements are as follows (in thousands):


	2023		2022		2021

Sales	$	56,811	$	59,748	$	52,287
Cost of Sales		51,937		53,238		45,945
Gross Profit	$	4,874	$	6,510	$	6,342

Advertising Expense

Research and Development

Restructuring Costs

Other Income

Income Taxes

Basic and Diluted Net Loss per Share

Basic and diluted net loss per share is calculated as follows (U.S. dollars in thousands, except per share data):


	Year ended October 31,
	2023		2022		2021
Numerator:
Net loss attributable to Calavo Growers, Inc.	$	(8,344)	$	(6,249)	$	(11,818)
Denominator:
Weighted average shares - Basic		17,750		17,663		17,621
Effect on dilutive securities – Restricted stock/units/options (1)		—		—		—
Weighted average shares - Diluted		17,750		17,663		17,621
Net loss per share attributable to Calavo Growers, Inc:
Basic	$	(0.47)	$	(0.35)	$	(0.67)
Diluted	$	(0.47)	$	(0.35)	$	(0.67)

(1)

Stock-Based Compensation

Foreign Currency Translation and Remeasurement

Fair Value of Financial Instruments

Derivative Financial Instruments

Noncontrolling Interest

The following tables reconcile shareholders’ equity attributable to noncontrolling interest related to Avocados de Jalisco (in thousands).


	Year ended		Year ended
Avocados de Jalisco noncontrolling interest	October 31, 2023		October 31, 2022

Noncontrolling interest, beginning	$	1,015	$	1,368
Net income (loss) attributable to noncontrolling interest of Avocados de Jalisco		377		(353)
Noncontrolling interest, ending	$	1,392	$	1,015

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (PARENTHETICAL) - $ / shares					12 Months Ended
	Sep. 01, 2023	Jul. 11, 2023	Apr. 06, 2023	Dec. 14, 2022	Oct. 31, 2023	Oct. 31, 2021
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Dividend paid (in dollars per share)	$ 0.10	$ 0.10	$ 0.10	$ 0.2875	$ 0.4875	$ 1.15

Basis of Presentation and Significant Accounting Policies - Suppliers Advances (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021	Oct. 31, 2020
Products
Advances to suppliers	$ 14,684	$ 12,430
Equity method investment-Don Memo
Products
Commitment amount				$ 2,400
Advances to suppliers	7,300	7,000	$ 4,200
Other related party \| Agricola Belher
Products
Advances to suppliers	5,400	4,500	$ 4,500
Other related party \| Silvalber
Products
Advances to suppliers	$ 2,800	$ 1,400

Inventories (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Inventories
Fresh fruit	$ 19,870	$ 16,938
Packing supplies and ingredients	9,438	14,176
Finished prepared foods	10,122	7,716
Total inventories	$ 39,430	$ 38,830

Income Taxes

12 Months Ended

Oct. 31, 2023

Income Taxes

Income Taxes

9. Income Taxes

The income tax provision consists of the following for the years ended October 31, (in thousands):


	2023		2022		2021

Current:
Federal	$	(387)	$	2,012	$	(3,449)
State		280		147		323
Foreign		1,143		1,209		16,703
Total current		1,036		3,368		13,577

Deferred:
Federal		(468)		(162)		790
State		(337)		746		(343)
Foreign		2,656		(701)		(3,934)
Total deferred		1,851		(117)		(3,487)
Change in valuation allowance		3,055		—		657
Total income tax provision	$	5,942	$	3,251	$	10,747

The following table presents domestic and foreign components of loss before income taxes for the years ended October 31, (in thousands):


	2023		2022		2021
Domestic	$	(8,741)	$	(1,411)	$	(4,959)
Foreign		6,716		(1,940)		3,784
Income (loss) before taxes	$	(2,025)	$	(3,351)	$	(1,175)

The above loss before taxes includes the net loss from unconsolidated entites of $0.9 million and $0.6 million for the years ended October 31, 2023 and 2022, which is recorded in foreign operations, respectively. Additionally, for fiscal 2022, we received income tax refunds of $6.7 million.

At October 31, 2023 and 2022, gross deferred tax assets totaled approximately $25.8 million and $23.5 million, while gross deferred tax liabilities totaled approximately $18.7 million and $16.2 million, respectively. Deferred income taxes

reflect the net of temporary differences between the carrying amount of assets and liabilities for financial reporting and income tax purposes.

Significant components of our deferred tax assets (liabilities) as of October 31, are as follows (in thousands):


	2023		2022


Intangible assets	$	941	$	2,828
Stock-based compensation		316		715
State taxes		7		6
Allowance for accounts receivable		1,276		936
Inventories		591		442
Accrued liabilities		2,238		1,143
Operating lease liabilities		14,444		14,861
Net operating loss		4,109		549
Capital loss carryover		806		804
Credits and incentives		1,099		1,194
Total deferred income tax assets		25,827		23,478

Property, plant, and equipment		(6,340)		(2,002)
Operating lease - right of use assets		(12,111)		(13,723)
Other		(227)		(490)
Total deferred income tax liabilities		(18,678)		(16,215)
Valuation allowance		(4,885)		(1,830)
Net deferred income tax assets	$	2,264	$	5,433

The Company’s net deferred income tax assets as presented in the consolidated balance sheets consists of the following items as of October 31, (in thousands):


	Year Ended October 31,
	2023		2022
Deferred income tax assets	$	3,010	$	5,433
Deferred income tax liabilities		(746)		—
Net deferred income tax assets	$	2,264	$	5,433

As of October 31, 2023, the Company had a federal net operating loss carryforward of $6.6 million. As of October 31, 2023 and 2022, the Company has gross state net operating loss carryforwards of approximately $13.4 million and $9.1 million, respectively, with carryforward periods primarily ranging from 20 years to indefinite.

The Company’s domestic operations has incurred a cumulative operating loss for the last three years. During the fourth quarter of the year ended October 31, 2023, based on this evaluation, and after considering future reversals of existing taxable temporary differences, the Company determined the realization of a majority of the net deferred tax assets no longer met the more likely than not criteria and a valuation allowance was recorded against the majority of the net deferred tax assets. As of October 31, 2023 and 2022, there is a valuation allowance of $4.9 million and $1.8 million, respectively, against the deferred tax assets that are more likely not to be realized. During the year ended October 31, 2023 and 2022, the Company increased the valuation allowance against deferred income tax assets by $3.1 million and $0.6 million, respectively.

A reconciliation of the significant differences between the federal statutory income tax rate and the effective income tax rate on pretax income (loss) for the years ended October 31, is as follows:


	2023		2022		2021

Federal statutory tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal effects	0.9		(1.3)		11.6
Rate differential on NOL carryback	—		—		125.8
Foreign tax rate differential	(29.8)		5.2		16.1
Uncertain tax positions	—		5.1		(1,059.9)
Stock based compensation	(26.3)		(6.1)		(16.7)
Provision to return	(12.3)		(59.9)		39.2
US tax on foreign income, net	(15.8)		—		—
State rate change	0.9		(2.5)		9.2
Valuation allowance	(150.7)		(24.2)		(44.1)
Limits on executive compensation	(21.6)		—		—
Other permanent differences	(19.1)		(33.8)		—
Other	(40.6)		(0.5)		(15.5)
	(293.4)	%	(97.0)	%	(913.3)	%

As of October 31, 2023, and 2022, we had $11.1 million for unrecognized tax benefits related primarily to the probable outcomes of the 2013 Mexico Assessment. See Note 7 for further information.

A reconciliation of the beginning and ending amount of gross unrecognized taxes (exclusive of interest and penalties) was as follows (in thousands):


	Year Ended October 31,
	2023		2022
Beginning balance	$	11,131	$	11,303
Reductions based on tax positions related to prior periods		—		(172)
Gross increase - Tax positions in prior periods		—		—
Gross increase - Tax positions in current period		—		—
Ending balance	$	11,131	$	11,131

Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next twelve months due to tax examination changes, settlement activities, expirations of statutes of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, the Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months. The Company accounts for income taxes regarding uncertain tax positions and recognized interest and penalties related to uncertain tax positions in income tax benefit/(expense) in the consolidated statements of operations. Total accrued interest and penalties recorded on the consolidated balance sheet were zero because the company prepaid the disputed amount. See Note 7 for additional details.

We are subject to U.S. federal income tax as well as income of multiple state tax and foreign tax jurisdictions. We are no longer subject to U.S. income tax examinations for the fiscal years prior to October 31, 2020, and are no longer subject to state income tax examinations for fiscal years prior to October 31, 2019.

The Company determined that certain foreign earnings to be indefinitely reinvested outside the United States. Our intent is to permanently reinvest these funds outside of the United States and our current plans do not demonstrate a need to repatriate the cash to fund our U.S. operations. However, if these funds were repatriated, we would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable to foreign tax authorities.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Property, Plant, and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Property, Plant and Equipment
Property plant and equipment, Gross	$ 228,648	$ 217,439
Less accumulated depreciation and amortization	(115,919)	(104,129)
Total property, plant, and equipment, net	112,729	113,310
Depreciation expense	13,800	15,000	$ 14,500
Amortization financing lease assets	1,913	1,756	$ 1,800
Land
Property, Plant and Equipment
Property plant and equipment, Gross	11,008	11,008
Buildings and improvements
Property, Plant and Equipment
Property plant and equipment, Gross	46,627	45,733
Leasehold improvements
Property, Plant and Equipment
Property plant and equipment, Gross	21,524	19,030
Equipment
Property, Plant and Equipment
Property plant and equipment, Gross	127,876	121,441
Information systems - hardware and software
Property, Plant and Equipment
Property plant and equipment, Gross	14,767	11,920
Construction in progress
Property, Plant and Equipment
Property plant and equipment, Gross	$ 6,846	$ 8,307

Other assets and Intangibles (Tables)

12 Months Ended

Oct. 31, 2023

Other assets and Intangibles

Schedule of Other Assets

Other assets consist of the following (in thousands):


	October 31,		October 31,
	2023		2022
Mexican IVA (i.e. value-added) taxes receivable, net (see Note 14)	$	49,888	$	43,625
Infrastructure advances (see Note 2)		1,641		1,241
Bridge loan to Agricola Belher (see Note 2)		—		1,700
Other		930		604
Total	$	52,459	$	47,170

Schedule of Intangible Assets

The intangible assets consist of the following (in thousands):


		October 31, 2023						October 31, 2022
	Weighted-	Gross				Net		Gross				Net
	Average	Carrying		Accum.		Book		Carrying		Accum.		Book
	Useful Life	Value		Amortization		Value		Value		Amortization		Value
Customer list/relationships	8 years	$	17,100	$	(12,517)	$	4,583	$	17,340	$	(11,373)	$	5,967
Trade names	8 years		3,949		(3,109)		840		4,060		(3,100)		960
Trade secrets/recipes	9 years		170		(170)		—		630		(626)		4
Brand name intangibles	indefinite		275		—		275		275		—		275
Intangibles, net		$	21,494	$	(15,796)	$	5,698	$	22,305	$	(15,099)	$	7,206

Basis of Presentation and Significant Accounting Policies - Investments (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021	Jul. 31, 2015
Significant Accounting Policies
Investments in unconsolidated entities	$ 2,902	$ 3,782
Don Memo \| Don Memo \| Agricola Belher
Significant Accounting Policies
Ownership interest (as a percent)				50.00%
Equity method investment-Don Memo
Significant Accounting Policies
Investments in unconsolidated entities	$ 2,900	$ 3,800	$ 4,300
Equity method investment-Don Memo \| Don Memo
Significant Accounting Policies
Ownership interest (as a percent)	50.00%

Inventories (Tables)

12 Months Ended

Oct. 31, 2023

Inventories

Schedule of Inventories

Inventories consist of the following (in thousands):


	October 31,		October 31,
	2023		2022

Fresh fruit	$	19,870	$	16,938
Packing supplies and ingredients		9,438		14,176
Finished prepared foods		10,122		7,716
Total	$	39,430	$	38,830

Income Taxes - Components of loss (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Jun. 30, 2023	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Income Taxes
Domestic		$ (8,741)	$ (1,411)	$ (4,959)
Foreign		6,716	(1,940)	3,784
Income (loss) before taxes, including net loss from unconsolidated entities		(2,025)	(3,351)	(1,175)
Net loss from unconsolidated entities		$ (879)	(564)	$ (1,719)
Income tax refunds	$ 2,800		$ 6,700

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(11))
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(10))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483621/220-10-S99-2

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(15))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

Leases - Costs and Other Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Lease costs
Amortization of financing lease assets (recorded in cost of sales)	$ 1,913	$ 1,756	$ 1,800
Operating lease cost	8,511	8,733
Short-term lease cost	2,476	2,483
Sublease income		(30)
Variable lease cost	198	133
Interest on financing lease liabilities	273	213
Total lease cost	13,371	13,288
Operating cash flows for operating leases	7,043	7,012
Financing cash flows for finance leases	1,793	1,683
Operating cash flows for finance leases	262	213
Right of use assets obtained for operating lease	$ 700	$ 1,000

Income Taxes - Net Deferred (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Income Taxes
Deferred income tax assets	$ 3,010	$ 5,433
Deferred income tax liabilities	(746)
Net deferred income tax assets	$ 2,264	$ 5,433

Dividends

12 Months Ended

Oct. 31, 2023

Dividends

Dividends

13. Dividends

In November 2022, we announced that we would begin declaring and paying dividends quarterly rather than annually which had been our prior practice.

On December 14, 2022, we paid a dividend of $0.2875 per share, or an aggregate of $5.2 million, to shareholders of record on November 16, 2022. On April 6, 2023, we paid a $0.10 per share dividend in the aggregate amount of $1.7 million to shareholders of record on March 24, 2023. On July 11, 2023, we paid a $0.10 per share dividend in the aggregate amount of $1.8 million to shareholders of record on June 27, 2023.

On September 1, 2023, our board of directors declared a cash dividend of $0.10 per share. This dividend was paid on October 11, 2023, to shareholders of record on September 27, 2023.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 505
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481004/946-505-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Property, Plant, and Equipment (Tables)

12 Months Ended

Oct. 31, 2023

Property, Plant, and Equipment

Summary of Property, Plant, and Equipment

Property, plant, and equipment consist of the following (in thousands):


	October 31,
	2023		2022

Land	$	11,008	$	11,008
Buildings and improvements		46,627		45,733
Leasehold improvements		21,524		19,030
Equipment		127,876		121,441
Information systems - hardware and software		14,767		11,920
Construction in progress		6,846		8,307
		228,648		217,439
Less accumulated depreciation and amortization		(115,919)		(104,129)
	$	112,729	$	113,310

Property, Plant, and Equipment

12 Months Ended

Oct. 31, 2023

Property, Plant, and Equipment

Property, Plant, and Equipment

4. Property, Plant, and Equipment

Property, plant, and equipment consist of the following (in thousands):


	October 31,
	2023		2022

Land	$	11,008	$	11,008
Buildings and improvements		46,627		45,733
Leasehold improvements		21,524		19,030
Equipment		127,876		121,441
Information systems - hardware and software		14,767		11,920
Construction in progress		6,846		8,307
		228,648		217,439
Less accumulated depreciation and amortization		(115,919)		(104,129)
	$	112,729	$	113,310

Depreciation expense was $13.8 million, $15.0 million and $14.5 million for fiscal years 2023, 2022, and 2021, respectively. Included in property, plant, and equipment are finance leases. Amortization of finance leases was $1.9 million, $1.8 million and $1.8 million for fiscal years 2023, 2022, and 2021, respectively.

Income Taxes - Deferred Taxes (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022
Income Taxes
Intangible assets	$ 941	$ 2,828
Stock-based compensation	316	715
State taxes	7	6
Allowance for accounts receivable	1,276	936
Inventories	591	442
Accrued liabilities	2,238	1,143
Operating lease liabilities	14,444	14,861
Net operating loss	4,109	549
Capital loss carryover	806	804
Credits and incentives	1,099	1,194
Total deferred income tax assets	25,827	23,478
Property, plant, and equipment	(6,340)	(2,002)
Operating lease - Right of use assets	(12,111)	(13,723)
Other	(227)	(490)
Total deferred income tax liabilities	(18,678)	(16,215)
Valuation allowance	(4,885)	(1,830)
Net deferred income tax assets	$ 2,264	$ 5,433

Other assets and Intangibles - Intangibles (Details) - USD ($) $ in Thousands	12 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2021
Finite-Lived and Infinite Intangible Assets
Finite and indefinite lived intangible assets gross	$ 21,494	$ 22,305
Accum. Amortization	(15,796)	(15,099)
Intangibles, net	5,698	7,206
Amortization expense	1,500	1,600	$ 1,600
Brand name intangibles
Finite-Lived and Infinite Intangible Assets
Gross carrying value and net book value	$ 275	275
Customer list/relationships
Finite-Lived and Infinite Intangible Assets
Weighted-Average Useful Life	8 years
Gross Carrying Value	$ 17,100	17,340
Accum. Amortization	(12,517)	(11,373)
Net Book Value	$ 4,583	5,967
Trade names
Finite-Lived and Infinite Intangible Assets
Weighted-Average Useful Life	8 years
Gross Carrying Value	$ 3,949	4,060
Accum. Amortization	(3,109)	(3,100)
Net Book Value	$ 840	960
Trade secrets/recipes
Finite-Lived and Infinite Intangible Assets
Weighted-Average Useful Life	9 years
Gross Carrying Value	$ 170	630
Accum. Amortization	$ (170)	(626)
Net Book Value		$ 4

Related-Party Transactions

12 Months Ended

Oct. 31, 2023

Related-Party Transactions

Related-Party Transactions

8. Related-Party Transactions

Board of Directors and Chief Executive Officer

Certain members of our Board of Directors market California avocados through Calavo pursuant to marketing agreements substantially similar to the marketing agreements that we enter with other growers. During the years ended October 31, 2023, 2022, and 2021, the aggregate amount of avocados procured from entities owned or controlled by members of our Board of Directors was $2.7 million, $7.5 million and $17.8 million, respectively. We did not have any amounts due to Board members as of October 31, 2023 and 2022. For the year ended October 31, 2023, we have purchased $3.1 million of avocados from entities affiliated with our Chief Executive Officer.

Agricola Don Memo, S.A. de C.V. (“Don Memo”)

In December 2014, Calavo formed a wholly-owned subsidiary, Calavo Growers De Mexico, S. de R.L. de C.V. (Calavo Sub). In July 2015, Calavo Sub entered into a Shareholder Agreement with Belo, a Mexican company owned by Agricola Belher, and formed Agricola Don Memo, S.A. de C.V. Belo and Calavo Sub have an equal one-half ownership interest in Don Memo in exchange for $2 million each. Pursuant to a management service agreement, Belo, through its officers and employees, has day-to-day power and authority to manage the operations. Therefore, Don Memo is accounted for on the equity method as an unconsolidated entity. Belo is entitled to a management fee payable annually in July of each year. Additionally, Calavo Sub is entitled to commission for the sale of produce in Mexico, the U.S., Canada, and any other overseas market.

As of October 31, 2023, 2022 and 2021, we have an investment of $2.9 million, $3.8 million and $4.3 million, respectively, representing Calavo Sub’s 50% ownership in Don Memo, which is included as an investment in unconsolidated entities on our balance sheet. We make advances to Don Memo for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from tomato sales under our marketing program to Don Memo, net of our commission and aforementioned advances. For the year ended October 31, 2022, we advanced an additional $2.8 million of preseason advances to Don Memo. As of October 31, 2023, 2022 and 2021, we had outstanding advances of $7.3 million, $7.0 million and $4.2 million, respectively, to Don Memo. As of October 31, 2023, 2022 and 2021, we had a tomato liability of $1.5 million, $1.9 million and $3.0 million, respectively, to Don Memo. During the year ended October 31, 2023, 2022 and 2021 we purchased $15.8 million, $13.7 million and $14.7 million, respectively, of tomatoes from Don Memo pursuant to our consignment agreement.

In October 2020, we entered into an infrastructure loan agreement with Don Memo for up to $2.4 million secured by certain property and equipment of Don Memo. This infrastructure loan accrues interest at 7.25%. The total outstanding balance related to this infrastructure loan agreement at October 31, 2023 was $1.6 million (included in other assets). The total outstanding balance related to this infrastructure loan agreement at October 31, 2022 was $1.6 million ($0.4 million is included in prepaids and other current assets and $1.2 million in other assets).

Belher

We make advances to Belher for operating purposes, provide additional advances as shipments are made during the season, and return the proceeds from tomato sales under our marketing program to Belher, net of our commission and aforementioned advances. We had grower advances due from Belher of $5.4 million, $4.5 million and $4.5 million as of October 31, 2023, 2022 and 2021, respectively.

In August 2018, we entered into an amended infrastructure agreement with Belher and advanced $3.0 million. This amount was to be paid back annually at $0.6 million through June 2023, and accrue interest of LIBOR plus 10%. In August 2020, we amended this agreement to lower the interest rate to 7.25% and change the repayment terms to two years ($0.9 million per year). This infrastructure advance was paid in full during fiscal 2022, through the netting against the grower payable to Belher (see below).

million on July 31, 2022, $0.9 million on July 31, 2023 and $1.7 million on July 31, 2024. As part of this amended loan agreement, we can withhold payments on both the infrastructure advances and the bridge loan through the netting against the grower payable due to Belher. For the years ended October 31, 2023 and 2022, we withheld $0.9 million and $1.1 million, respectively, from payments to Belher to offset the bridge loan repayments. As of October 31, 2023, the balance of the bridge loan has been recorded as $1.7 million in prepaid expenses and other current assets. As of October 31, 2022, the balance of the bridge loan has been recorded as $0.9 million in prepaid expenses and other current assets and $1.7 million in other assets. During the year ended October 31, 2023, 2022 and 2021, we purchased $16.2 million, $19.4 million, and $16.3 million, respectively, of tomatoes from Belher pursuant to our consignment agreement.

Avocados de Jalisco, S.A.P.I. de C.V. (“Avocados de Jalisco”)

In August 2015, we entered into a Shareholder’s Agreement with various partners to form Avocados de Jalisco, which is a Mexican corporation engaged in procuring, packing, and selling avocados. This entity is approximately 83% owned by Calavo and is consolidated in our financial statements. Avocados de Jalisco built a packinghouse located in Jalisco, Mexico and such packinghouse began operations in June of 2017. As of October 31, 2023 and 2022, we have made an insignificant amount of preseason advances to various partners of Avocados de Jalisco. During the year ended October 31, 2023, 2022 and 2021, we purchased approximately $8.1 million, $7.0 million and $13.0 million, respectively, of avocados from the partners of Avocados de Jalisco.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Name Accounting Standards Codification
-Section S99
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-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
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-Name Accounting Standards Codification
-Section 50
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

Other assets and Intangibles

12 Months Ended

Oct. 31, 2023

Other assets and Intangibles

Other assets and Intangibles

5. Other Assets and Intangibles

Other assets consist of the following (in thousands):


	October 31,		October 31,
	2023		2022
Mexican IVA (i.e. value-added) taxes receivable, net (see Note 14)	$	49,888	$	43,625
Infrastructure advances (see Note 2)		1,641		1,241
Bridge loan to Agricola Belher (see Note 2)		—		1,700
Other		930		604
Total	$	52,459	$	47,170

The intangible assets consist of the following (in thousands):


		October 31, 2023						October 31, 2022
	Weighted-	Gross				Net		Gross				Net
	Average	Carrying		Accum.		Book		Carrying		Accum.		Book
	Useful Life	Value		Amortization		Value		Value		Amortization		Value
Customer list/relationships	8 years	$	17,100	$	(12,517)	$	4,583	$	17,340	$	(11,373)	$	5,967
Trade names	8 years		3,949		(3,109)		840		4,060		(3,100)		960
Trade secrets/recipes	9 years		170		(170)		—		630		(626)		4
Brand name intangibles	indefinite		275		—		275		275		—		275
Intangibles, net		$	21,494	$	(15,796)	$	5,698	$	22,305	$	(15,099)	$	7,206

We recorded amortization expense of approximately $1.5 million, $1.6 million, and $1.6 million for fiscal years 2023, 2022, and 2021, respectively. We anticipate recording amortization expense of approximately $1.5 million for fiscal year 2024, $1.5 million for fiscal year 2025, $1.5 million for fiscal year 2026, and $0.9 million thereafter.