Good day, and welcome to the Limoneira Second Quarter Fiscal Year 2014 Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to John Mills of ICR. Please go ahead. .

Good afternoon, everyone, and welcome to Limoneira's Second Quarter Fiscal Year 2014 Conference Call. On the call today are Harold Edwards, President and Chief Executive Officer; and Joe Rumley, Chief Financial Officer.

By now, everyone should have access to the second quarter fiscal 2014 earnings release, which we announced today at approximately 4:00 p.m. Eastern Time. If you have not had a chance to review the release, it's available on the Investor Relations portion of the company's website at limoneira.com.

This call is being webcast and a replay will be available on Limoneira's website as well. .

Before we begin, we would like to remind everyone that the prepared remarks contains forward-looking statements and management may make additional forward-looking statements in response to your questions.

Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control that could cause its future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements.

Important factors that could cause or contribute to such differences include risks detailed in the company's 10-Q and 10-K filed with the SEC and those mentioned in the earnings release.

Except as required by law, we undertake no obligation to update any forward-looking or other statements herein whether as a result of new information, future events or otherwise. .

Also, within the company's earnings release and in today's prepared remarks, we include EBITDA, which is the non-GAAP financial measure. A reconciliation of EBITDA to the most directly comparable GAAP financial measures is included in the company's press release, which has been posted on our website. .

And with that, it's my pleasure to turn the call over to the company's President and CEO, Mr. Harold Edwards. Go ahead, Harold. .

Thanks, John. Good afternoon, everyone, and thank you for joining us. On today's call, I'll begin with a brief overview of some financial highlights for the quarter and provide an update on our progress across all of our different business areas.

Joe will review the financial results for the second quarter in more detail, and I'll then discuss our 2014 outlook and open the call up for your questions. .

Our second quarter financial results reflect a strong progress we are making with the expansion of our overall business and represent a solid start to fiscal year 2014.

In the second quarter, we once again delivered top line growth with revenue increasing 7% compared to the same period of last year due to higher lemon and citrus sales, partially offset by a reduction in avocado revenue.

Lemon sales increased 17% compared to the second quarter of fiscal year 2013 as a result of higher lemon prices, recent acquisitions and execution of our direct lemon sales strategy. The lemon prices we are currently enjoying are significantly higher than historical averages.

And while we expect favorable prices to continue for the remainder of the year, we anticipate to settling back to historical averages in the coming months. .

In addition to sales growth, we are also pleased that our operating income in the second quarter improved by 35% to $3.2 million compared to $2.4 million for the second quarter of last year. Operating income for the 6 months ended April 30, 2014, includes approximately $2.6 million of operating income from our recently acquired orchards.

We are pleased with this contribution as it underscores our ability to successfully integrate acquired orchards into our operation. We have a pipeline of potential acquisition opportunities and we'll continue to evaluate additional strategic agribusiness expansion opportunities. .

As we've said before, steadily increasing our total agricultural acres is an important long-term objective. Based on our year-to-date results and positive outlook for the second half of the year, we are raising our previously issued guidance, which I'll review later during today's call.

I'd like to also note that in the second quarter, we reduced our long-term debt by $10.9 million, highlighting our progress with another one of our key long-term initiative. .

The debt reduction was due to improved cash flow from operations and proceeds from the issuance of 9,300 shares of preferred stock for an aggregate purchase price of $9.3 million.

The preferred stock was issued in connection with agreements between our company and affiliates of Water Asset Management to explore strategies related to the highest and best use of Associated's real estate and water assets, which may involve the sale, lease or other monetization of part or all of these assets with the net proceeds of potential transactions equally shared by Limoneira and Water Asset Management.

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We expect to continue to benefit from Associated's agricultural operations, which contributed approximately $2.4 million of operating income in our first 6 months of this year, unless an asset transaction occurs that results in reduction or cessation of farming operations in the future.

We have significant water rights throughout the areas in which we operate, and evaluating strategic opportunities to monetize our water right is a component of our overall business strategy. .

We are excited about the momentum for Limoneira and continue to make progress on all aspects of our business. First, regarding our agribusiness, we're benefiting from the additional 2,300 agricultural acres that we acquired or leased in the last few years and a very strong pricing environment for our lemons.

We are progressing on the expansion of our lemon packing facilities, which is expected to increase the efficiency and double the annual capacity of our lemon packing operations when it is completed during 2015.

As we continue to acquire additional lemon orchards, build relationships with third-party growers and add lemon customers, the expanded facility will help us maximize business opportunities for Limoneira. Combined with our expanding acreage, the new facility should enable us to increase sales and operating income from lemon sales. .

Now I'd like to comment on the California drought as it relates to our business. As we discussed on last quarter's call, California has been experiencing one of the most severe droughts on record and drought conditions have continued. These conditions have resulted in reduced water levels in streams, rivers, lakes, aquifers and reservoirs.

Federal officials who oversee the Central Valley project, California's largest water delivery system, recently announced that no water is expected to be provided to San Joaquin Valley farmers this year, and only 50% of the contracted amount will be provided to urban areas from the water system. .

I would like to reiterate that Limoneira is extremely fortunate in that thus far, the drought has not had a material impact on our operation.

Water for our farming operations located in Ventura County, California is secured from the existing water resources associated with our land, which includes approximately 8,600-acre feet of adjudicated water rights in the Santa Paula Basin and the unadjudicated Fillmore Basin.

We used a combination of groundwater provided by wells and water from various local water districts in Tulare County, California, which is in the agriculturally productive San Joaquin Valley.

Our associated farming operations in Yuma, Arizona, sources water from the Colorado River through the Yuma Mesa Irrigation and Drainage District, where we have access to approximately 11,700-acre feet of Class 3 Colorado River water rights. .

For the first 6 months of fiscal year 2014, irrigation costs for our agricultural operations were $300,000 greater than that same period last year, resulting from pumping more water from wells and basins due to less rainfall.

We expect this trend to continue as we pump more water than historical averages as demand for limited water supplies increases the cost for such supplies and federal state and local water delivery infrastructure costs increase to access these limited water supply. .

In challenging conditions such as these, it is beneficial that we have significant water rights and other water across -- other water access across our agribusiness operations. We believe we have access to adequate supplies of water for our agricultural operations, as well as our real estate development and rental operation segments of our business.

However, if crop conditions persist or worsen, or if regulatory responses to such conditions limit our access to water, our business could be negatively impacted by these conditions or responses in terms of access to water and/or cost of water. .

Turning to the rental operation segment of our business, we remain on track with the development of 71 additional agricultural workforce housing unit in Santa Paula, California, that will be available for rent to local agricultural workers and Limoneira employees towards the end of 2014.

We anticipate that this will add $850,000 to $900,000 of revenue annually to our business. Our rental operation segment provides a dependable revenue stream and source of annual cash flow, as well as the unique ability to offer housing to agricultural workers and to our employees. .

Regarding our real estate development business, we continue to be on track with our time line we discussed during our fourth quarter call with the East Area 1 project known as the Santa Paula Gateway project.

As a reminder, this project consists of a 550-acre master planned community with up to 1,500 residential units, 560,000 square feet of commercial space and 150,000 square feet of light industrial facilities.

We estimate that the residential component represents approximately 25% of all single-family homes, townhomes and condominiums that are currently planned or approved in Ventura County over the next 10 years. .

Last month, we submitted the master tentative track map to the city of Santa Paula, which we expect to be approved at this calendar year. Approval of this track map is necessary prior to commencement of development of the property. In the meantime, we continue to engage in discussions with leading homebuilders and strategic investors.

We are committed to entering into a deal with a reputable builder or builders that will optimize the success, cash flow and profitability of the project, and ultimately maximize shareholder value. We remain focused on our goal to break ground on this project during 2015. .

In summary, this is an exciting time for Limoneira. Our expanding agribusiness has enabled us to consistently improve our financial performance. We remain uniquely situated to capitalize on additional acquisition opportunities and further establish our leadership position in the citrus and avocado markets.

And importantly, we are moving ahead with our real estate development efforts and look forward to begin to capitalize on our rich portfolio of real estate assets in California. .

And with that, I'd like to turn the call over to Joe, to discuss our second quarter financial results. .

Thank you, Harold. Good afternoon, everyone. For the second quarter ended April 30, 2014, revenue was $24.8 million, compared to revenue of $23.3 million in the second quarter of the previous year. Agribusiness revenue was $23.6 million, compared to $22.2 million in the second quarter of last year, primarily reflecting higher lemon revenue.

Rental operations revenue was $1.2 million in the second quarter of fiscal year 2014, compared to $1.1 million in the second quarter of last year. Real estate development revenue was $31,000, compared to $41,000 in the second quarter of last year. .

Our second quarter 2014 agribusiness revenue includes $18.1 million in lemon sales, compared to $15.5 million in lemon sales during the same period of fiscal year 2013, which reflects a higher average price per carton due to more favorable market conditions, partially offset by a lower number of cartons of fresh lemons sold.

We generated avocado sales of $1.2 million in the second quarter of fiscal year 2014 compared to $2.7 million in the same period of fiscal year 2013, reflecting lower pounds of avocados sold, partially offset by higher prices.

We recognized $3.4 million of orange revenue in the second quarter of 2014 compared to $2.3 million of orange revenue in the same period last year. This increase reflects a higher average price per field box, partially offset by a lower number of field boxes sold.

Specialty citrus and other crop revenues were $0.9 million in the second quarter of fiscal year 2014, compared to $1.7 million in the second quarter of fiscal year 2013, resulting from lower average prices and lower volume. .

Turning to costs and expenses for the second quarter of fiscal year 2014. We incurred $21.6 million of costs and expenses, as compared to $20.9 million in the second quarter of last year.

The year-over-year increase in operating expenses primarily reflects increased agribusiness costs associated with our growing agribusiness, including acquisition of Associated Citrus Packers and Lemons 400, as well as certain SG&A expenses associated with our strategic initiatives. .

Operating income for the second quarter of 2014 increased 35% to $3.2 million compared to $2.4 million in the second quarter of last year.

EBITDA was $4.1 million in the second quarter of 2014, compared to $4.2 million in the same period of last year, as improvement in our citrus business was offset by a decline -- expected decline in avocado revenue due to the alternate bearing nature of this fruit. .

Second quarter of fiscal year 2013 EBITDA includes $1.3 million of net gain from the aggregate of the sale of Calavo Growers stock and a loss on the disposition of our HM East Ridge, LLC equity investment.

The second quarters of fiscal year 2014 and '13, all interest incurred was capitalized on nonbearing interest orchards, real estate development projects and significant construction in progress. .

Noncash interest income as a result of fair value adjustments in our interest rate swap was 0 in the second quarter of fiscal year 2014, compared with $200,000 in the same period of last year. Interest rate swap that generated that income in the prior periods expired in the third quarter of fiscal year 2013.

Also, for comparative purposes, it's important to recall that in the second quarter of fiscal year 2013, we realized a $3.1 million gain on the sale of the Calavo stock. .

Net income applicable to common stock for the second quarter of fiscal year 2014 was $2 million, compared to $2.4 million in the second quarter of the prior year.

Earnings per diluted share for the second quarter of fiscal year 2014 was $0.15 on approximately 14.1 million weighted average common shares outstanding, compared to earnings per diluted share of $0.19 on approximately 12.8 million weighted average common shares outstanding in the same period last year. .

Again, for comparative purposes, note that the second quarter of 2013, net income and earnings per share includes the aforementioned gain on the sale of Calavo Growers stock and a loss on the equity investments of $1.8 million related to the sale of HM East Ridge LLC.

These 2 transactions generated approximately $900,000 of net income or $0.07 earnings per diluted share, in aggregate, in the second quarter of fiscal year 2013. The year-over-year increase in shares outstanding is primarily due to our February 2013 public offering of common stock and shares issued in connection with the acquisition of Associated. .

Now turning to our year-to-date results for the first 6 months of 2014. Revenue was $50.7 million, compared to $40.7 million in the same period last year. Operating income for the first 6 months of fiscal year 2014 was $1 million compared to an operating loss of $2.9 million in the same period last year.

Net income applicable to common stock for the first 6 months of fiscal year 2014 was $800,000, compared to a net loss of $700,000 last year.

Earnings per diluted share for the first 6 months of fiscal year 2014 was $0.05 on approximately 14 million weighted average common shares outstanding, compared to a loss per diluted share of $0.06 on approximately 12.1 million weighted average common shares outstanding.

The year-over-year increase in shares outstanding is primarily due to the company's February 2013 public offering of common stock and the shares issued with the Associated acquisition. .

Regarding our balance sheet, as Harold discussed earlier, we reduced long-term debt in the second quarter by $10.9 million due to improved cash flow, as well as proceeds from the issuance of series B-2 convertible stock.

Long-term debt, as of April 30, 2014, was $60.4 million, compared to $71.3 million as of January 31, 2014, and $61.6 million as of October 31, 2013, our year end. Net cash from operating activities increased $7.7 million in the 6 months ended April 30, 2014, compared to the same period of fiscal year '13.

Net cash used in investing activities increased $9.5 million in the 6 months ended April 30, 2014, compared to the same period of fiscal year 2013, primarily related to investments in the expansion of lemon packing facilities and additional farm worker housing units. .

Now I'd like to turn the call back to Harold to discuss our fiscal year 2014 guidance. .

Thanks, Joe. Based on our second quarter results and outlook for the remainder of the year, we are raising our previously issued guidance for fiscal year 2014 and we are also adding a new guidance metric, earnings per diluted share.

For the fiscal year ending October 31, 2014, we expect to sell between 3 million and 3.3 million cartons of fresh lemons and expect to sell approximately 6 million pounds of avocados. The California avocado crop typically experiences alternate years of high and low production due to plant physiology.

Fiscal year 2013 was a high avocado production year and fiscal year 2014 is expected to be a lower avocado production year. Lemon and avocado prices are expected to be higher in fiscal year 2014 and fiscal year 2013 due to lower industry production. .

Due to higher lemon prices than previously expected, the company is raising operating income guidance to $10.6 million to $11.8 million, compared to previous guidance of approximately $7 million. The increased operating income in fiscal year 2014 represents approximately a 100% increase over fiscal year 2013 operating income of $5.4 million.

The expected increase in operating income is primarily due to the additional lemon revenue generated by the acquisitions of Associated and Lemons 400, and increased lemon prices, partially offset by lower expected avocado revenue.

Fiscal year 2014 pretax earnings are anticipated to be $11.3 million to $12.4 million, compared to previous guidance of approximately $8.1 million, which is similar to fiscal year 2013 pretax income. .

The company expects fiscal year 2014 earnings per diluted share to be in the range of $0.45 to $0.50, based on estimated weighted average diluted common shares outstanding of approximately 14 million shares.

Consistent with the typical seasonality of the company's agricultural operation, we expect that substantially all of the second half of fiscal year 2014 earnings will be generated in the third quarter with little to no earnings in the fourth quarter. .

Overall, I'm very pleased with our performance during the first half of this year, and look forward to an even stronger second half of the year. This has enabled us to raise guidance as we look into 2015. We have a lot of very exciting opportunities on the horizon. We will be adding the new rental income to our performance.

We expect to complete the new packing house, which is expected to improve our operating margins, and we expect to be able to announce the beginning of home sales from East Area 1. In addition to these strategic initiatives, we continue to look at additional acquisition opportunities. .

And with that, I'd like to now open the call up to your questions.

Operator?.

[Operator Instructions] And we do have a question from Brent Rystrom from Feltl. .

Just a couple of quick questions for you.

Can you give us kind of a sense or time line of once the tentative tract map is accepted, what's going to kind of come following that, the next few steps?.

Sure. I'd be delighted to. So we expect a joint Santa Paula planning commission and a city council joint hearing in early to mid-September. At which point, that means that the project is fully entitled.

And between now and that time, we'll also be working on structuring relationships with a builder or homebuilders, who will then go in and take the tentative master tract maps to process final tract maps, which we anticipate should be approved sometime around the first of the year, call it, January 1.

And then based on those first transactions that we put together with homebuilders, we anticipate breaking ground sometime around January of 2015. .

From the acquisition perspective on the agriculture side, given the expansion of the packing house, can you get us kind of your thoughts on geographically where would be the ideal acquisition so you can lever that packing house to its best ability as it gets added?.

So the good news is that we're long acres in the area where the land values are the most valuable, which is here on the Coast in District 2.

So we will probably be limiting our acquisition focus on the Coast and really continue to turn over rocks up in San Joaquin Valley, which is the winter lemon, where our programs can stand to grow significantly to balance out the year of fruit, as well as we continue to explore opportunities in the desert area, which really is all the way through the Coachella Valley, the Imperial Valley, all the way over to Yuma, Arizona.

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Again, from a simplistic perspective, can you give us a little definition of what the packing house will bring you as far as margin or added margin per carton?.

We believe that -- so as sort of a way to answer the question, maybe a sort of a little bit of background on the rationale for the capacity enhancement, but also the efficiency enhancement.

If you look at our business 20 years ago, about 95% to 98% of all the lemons that we sold out of the packing house were sold in a 40-pound box, which is the standard unit of measure and a standard package that we use to ship lemons.

Today, that's fallen to approximately 50% of all of the lemons that we sell with the other 50% now being run through in different packing configuration.

And so as the market has changed and customers like Wal-Mart have requested packages to be delivered in reusable plastic containers, as the number of bags that we've sold has increased and Tri-Walls and all kinds of new packing configurations have been introduced to the market, we've really been forced to address those -- that change in packaging by adding labor and adding people.

The packing house expansion will involve a very long linear set of drop points onto belts, where every one of the drop points now can have a different packing configuration. And that efficiency -- basically, with the same number of people, we'll be able to process twice the amount of the fruit.

And we believe that the savings are on the magnitude of $1 per carton on what we believe will be somewhere around 4 million cartons that we'll be targeting for running across that line, once we've finished the investment and the expansion. .

And just to clarify, the 4 million cartons will be the first year after that, so will that be sometime in '15 or... .

We think -- so there's a little bit of a go get in that number. Today, we stand at about 3.5 million cartons a year. And given the variability of different crops, we think if we didn't change any -- or add any additional acreage, we think we should hold somewhere around 3.5 million cartons.

So in that forward-looking view, there's a go get of adding about 0.5 million cartons of lemons.

But we believe through our contact lists of outside growers who we're targeting to bringing to the packing house plus our continued activities in looking to expand our acreage and purchase more productive lemon acreage, we think 4 million cartons is an achievable number for the 2015, 2016 operating season. .

And then final question on the... .

Capacity, it's more -- it's around 8 million, so the 4 million still gives us plenty of room to continue to grow and add volume. .

I'm sorry, Joe, now my next question, so the capacity with the expansion completed will be 8 million, is that what you just said?.

Yes. .

All right.

And then my final question, just out of curiosity, on the agricultural housing you're adding, what sort of restrictions are there on those in the future as far as how you can utilize or sell those?.

Historically, the purpose of the farmworker housing goes back to the early years of the company and we've continued to use the approximately 200 units that we have today to be rented by some of our employees and some other agricultural workers in the county.

So the planned continued use for the additional 70-or-so units would be a continuation of that. .

And Brent, I might add that, today, the reality in the marketplace is that there's a significant demand that exceeds supply situation and conditions for workforce housing. And so there really are waiting lists that are hundreds of people along right now. We believe that the absorption of this additional 71 units will be instant.

And we believe it will be an instantly accretive use of capital once we've finished this expansion project. .

How much will the 71 units cost?.

So the simple way to think about it is, we will be investing approximately $100,000 a unit times 71 units. And the average rent per unit will be somewhere in the $12,000 to $15,000 a year range. .

These are manufactured homes. .

And our next question will come from Steven Martin with Slater. .

You talked about higher pricing and maybe I missed it, can you actually talk about what the pricing in lemons, oranges and avocados are looking like today?.

So again, anecdotally, because the market is moving all over the place, but remember in lemons, there are 8 different sizes and 3 different grades. So there's a very broad range of pricing. And unfortunately, lemon trees don't only grow the one size that we're trying to hit the market with.

So the whole secret and trick to being able to sell a tree is to create marketing programs for all your different grades and sizes. But again, anecdotally, our budget called for average sales prices today of about $17 to $17.50 a carton. And again, anecdotally, right now, we're averaging approximately $23 a carton.

I think it's important to make the point that these prices aren't sustainable forever. At some point, there'll be new supplies that come in from the Southern Hemispheres and certainly from next year's crop that will actually bring these prices down.

We -- for the rest of this year, we continue to forecast very strong pricing, but we do understand that, at some point, they'll drop back down to a normal price. And I think a normal price that we should expect today is anywhere from $15 to $17 a carton. .

As it relates to avocados, again, this is a shorter crop in avocados versus last year, and we're experiencing average pricing in the $1.20 a pound range, which is significant. Last year, I believe, Joe, do you remember... .

$0.82 last year and it's closer to about $1 right now. .

Okay. .

Yes. .

And we continue to believe that will go up as our first picks cleaned off some of our smaller, weaker and off-grade fruit.

So as the season goes on and you'll see, I think the other thing to just mentioned is that the majority of our avocados, in fact, all of our avocados will be harvested in the third quarter, which is why we made the comment that fourth quarter should be basically a breakeven quarter for us.

But the real earnings will be in the third quarter because the rest of the avocado crop will be harvested. Oranges are experiencing -- or experienced, I should say, a situation that was very similar to the story I explained in lemons.

And on average, we experienced an approximately 35% to 40% premium to our anticipated prices that we budgeted for the year. So all of our major crops enjoyed significantly higher pricing this year. .

That's great. When you talk about the acreage and the acquisitions you've done.

If you don't do another acquisition, okay, you have acreage that's been planted and bringing back online, what would your -- how much would your producing acreage grow next year versus this year?.

So the way we report producing acreage is we're already reporting it as producing. But I think to dig into your question, you're basically pointing out that some of the acreage is bearing and some of it is not bearing, so I think... .

Sorry, I used the wrong terminology. .

So Joe has a chart right now maybe you can articulate what you see. .

Yes. Steve, a good place that will help you see some of that, we added it in this year's 10-K and the annual report on Page 11. There's a chart that shows, by crop, the different years that they've been planted. So if you look at lemons, and as I'm looking at the 10-K, like I said, it's a 400 acres of lemons... .

Nonbearing. .

Nonbearing. They're 0 and 4 years. So that will start to roll out over the next few years and become bearing. .

Got you. All right.

And the damage that was done to the lemon orchards and the others citrus, is that permanent damage or is that just generally seasonal damage?.

No. It's just seasonal, Steve, and that's a great question. It was a tough freeze, but it just impacted some of the fruit, it didn't actually hurt the trees. So the trees -- the flesh on the trees is beautiful, the trees look very healthy right now. They're all a little thirsty right now just because of the lack of rain.

But generally, you'll see full-bearing conditions from very healthy trees in the coming season. And I fully expect the crop to be back to normal. The one caveat that I would mention is we're watching very closely what's going on with our friends down in the Southern Hemisphere as we go into our summer months here.

Remember, they're going into their winter months right now. And so the one thing that could really impact next year is whether Chile and Argentina experience freezes again this year. So far so good, but we're watching it very closely. .

Got you.

I'm in the 10-K and I see a couple of grids, but nothing on Page 11, am I looking in the wrong place?.

I'm not sure. I've got the annual report on Page 11 the shows the table. .

Okay. Then it's the annual, not the -- okay. I'll look at the other report. .

The annual report. .

[Operator Instructions] And it looks like we do have a follow-up from Steven Martin. .

I forgot to ask can you update us on Windfall? Because I believe... .

Yes. So I had a chance to visit Windfall this last week. The trellises are in on the 100 acres of grapes. The vines will be going in next week. We are -- and after that, we will have successfully planted 100 acres of the Cabernet Sauvignon variety. We -- I also inspected the 4 new wells that were drilled on the property.

And the first of those 4 is about to be connected with a significant new water flows. Our well levels with the existing wells continue to be strong, which is very, very positive for that piece of property, as well levels around the greater part of the Paso Robles AVA have been dropping.

So I was very pleased with what I saw and I think it puts us into great position in 3 years from now to be harvesting some of our very first grapes, which we'll contractually sell to reputable wineries. .

And we do have a follow-up question from Brent Rystrom with Feltl. .

Yes, just 2 quick questions to follow-up on that question.

What are -- of the 760 acres, what are the long-term acres to grapes? And then secondly, at maturity, what does the contract look like it will generate EBITDA per acre?.

So we've master planned the planting of 500 acres of grapes, and that leaves 260 acres of unplanted areas that will remain sort of in their current condition as, hopefully, equestrian users, which we believe will promote the lifestyle component of that development project.

We're still, I think, I'm a little bit -- I'd be premature, at this point, Brent, speculating on the types of contracts that we'll be able to nail down in terms of pricing and yield. So if you would allow me to sort of an opportunity to dig a little deeper and wait a little longer before I specifically try to get at that excellent question.

We believe that where the planting is, in combination with the amount of water that we're able to put on it surrounded by the type of production that's all around it, this should be an above-average yield scenario.

But of grapes, that typically command a premium to other grapes that might be planted in, say, more of the San Joaquin Valley just because of the topography and the reputation that the Paso Robles AVA has. .

Maybe a different way of saying it is, with our contact with bulk grape producers, they're often looking at a couple thousand dollars an acre of EBITDA, would there be reason you would expect to not at least be in that expectation?.

Our pro formas are $4,000 to $5,000 net per acre based on what we believe we'll be able to achieve in the relationship between yield and contractual price. .

And at this time, we have no further questions in the queue. I'd like to turn the call back over to Harold Edwards for any additional or closing remarks. .

Thank you for your questions and interest in Limoneira. Over the next several months, we'll be attending select investor events and we hope to see many of you there. Thank you again and have a great day. .

That does conclude our conference for today. Thank you for your participation..